Hedgehog (Hh) signalling has a crucial role in testis development. Sertoli cell-derived desert hedgehog (DHH) guides the formation of testis cords and differentiation of foetal-type Leydig cells. Dhh mutant mice are infertile due to a block in germ cell differentiation, hypogonadism and hypoandrogenism. Hh signalling pathway components are also expressed in postnatal testis. In the rat testis the transcription factor of the Hh pathway, glioma-associated oncogene homologue (GLI1), is expressed by a wide variety of germ cells. This suggests that Hh signalling is involved in spermatogenesis at many different levels. Our data show that canonical Hh signalling is turned off in early condensing spermatids that strongly express the negative regulator of the pathway, suppressor of fused (SUFU). Most of the Hh pathway specific mRNAs display the highest values in stages II–VI of the rat seminiferous epithelial cycle. The key endocrine regulator of germ cell differentiation, FSH, down-regulates Dhh mRNA levels in vitro. Hh signalling inhibition in vitro leads to massive apoptosis of germ cells. In prepubertal rat testis imatinib mesylate-induced inhibition of tyrosine kinases impinges on Dhh transcript levels and Hh signalling. Our data indicate that Hh signalling is part of the paracrine signalling network in the rat testis. It promotes the survival of germ cells and is suppressed by FSH.