Shh and the Gli genes are normally expressed in hair follicles, and skin tumours expressing Gli1 may arise from hair follicles. The level of Gli1 expression correlates with the tumor grade in bone and soft tissue sarcomas. Transgenic mice and frogs overexpressing Gli1 develop BCC like tumours as well as other hair follicle-derived neoplasias, such as trichoepitheliomas, cylindromas, and trichoblastomas. Expression of Gli1 in the embryonic frog epidermis results in the development of tumours that express endogenous Gli1. This suggests that overexpressed Gli1 alone is probably sufficient for tumour development Mutations leading to the expression of Gli1 in basal cells are thus predicted to induce BCC formation.