Congenital malformation of the foregut is common in humans, with an estimated incidence of 1 in 3000 live births, although its aetiology remains largely unknown. Mice with a targeted deletion of Sonic hedgehog (Shh) have foregut defects that are apparent as early as embryonic day 9.5, when the tracheal diverticulum begins to outgrow. Homozygous Shh-null mutant mice show oesophageal atresia/stenosis, tracheo-oesophageal fistula and tracheal and lung anomalies, features similar to those observed in humans with foregut defects. The lung mesenchyme shows enhanced cell death, decreased cell proliferation and downregulation of Shh target genes. These results indicate that Shh is required for the growth and differentiation of the oesophagus, trachea and lung, and suggest that mutations in SHH and its signalling components may be involved in foregut defects in humans.