Signaling by the hedgehog ( hh )-class gene pathway is essential for embryogenesis in organisms ranging from Drosophila to human. We have isolated a hh homolog ( Hro-hh ) from a lophotrochozoan species, the glossiphoniid leech, Helobdella robusta ,and examined its expression by reverse transcription polymerase chain reaction(RT-PCR) and whole-mount in situ hybridization. The peak of Hro-hh expression occurs during organogenesis (stages 10-11). No patterned expression was detected within the segmented portion of the germinal plate during the early stages of segmentation. In stage 10-11 embryos, Hro-hh is expressed in body wall, foregut, anterior and posterior midgut, reproductive organs and in a subset of ganglionic neurons. Evidence that Hro-hh regulates gut formation was obtained using the steroidal alkaloid cyclopamine,which specifically blocks HH signaling. Cyclopamine induced malformation of both foregut and anterior midgut in Helobdella embryos, and no morphologically recognizable gonads were seen. In contrast, no gross abnormalities were observed in the posterior midgut. Segmental ectoderm developed normally, as did body wall musculature and some other mesodermal derivatives, but the mesenchymal cells that normally come to fill most of the coelomic cavities failed to develop. Taken with data from Drosophila and vertebrates, our data suggest that the role of hh -class genes in gut formation and/or neural differentiation is ancestral to the bilaterians,whereas their role in segmentation evolved secondarily within the Ecdysozoa.