During pulmonary development, Sonic hedgehog (Shh) and transforming growth factor β1 (TGF-β1) signalling both contribute to branching morphogenesis. In interstitial lung disease, the complex alveolar structure of the lung is disrupted and remodelled, which leads to fibrosis, loss of respiratory surface, morbidity, and mortality. It is well documented that TGF-β1 is involved in fibrosis. However, little is known about Shh signalling in damaged epithelia. This study examined whether or not components of the Shh signalling pathway, as well as TGF-β1, are expressed in human fibrotic lung disease (cryptogenic fibrosing alveolitis and bronchiectasis) and in murine experimental models of fibrotic and non-fibrotic chronic pulmonary inflammation. Using immunohistochemistry, it was observed that Shh, like TGF-β1, is up-regulated in epithelial cells at sites of fibrotic disease but not non-fibrotic inflammation. The Shh receptor patched was detected in infiltrating mononuclear cells and alveolar macrophages, as well as normal resting peripheral blood T lymphocytes. Neither Shh nor patched is expressed by hyperproliferative goblet cells in inflammatory epithelium. This study demonstrates that patched is present in human peripheral CD4 and CD8 lymphocytes at both protein and mRNA levels. Taken together, these results suggest that components of the highly conserved Shh signalling pathway may play a role in the remodelling of damaged pulmonary epithelium and that damaged epithelium and cells of the immune system may communicate via this pathway. Copyright © 2003 John Wiley & Sons, Ltd.