Mutations in mouse and human patched (PTCH) genes are associated with birth defects and cancer. PTCH, a 12-pass transmembrane protein, is a receptor for Sonic hedgehog (Shh) signaling proteins. Shh proteins activate transcription of target genes, including PTCH, via GLI transcription factors. Here we identified seven and five isoforms of human and mouse PTCH mRNA, respectively, which are generated by the complex alternative use of five exons as the first exon (exons 1a to 1e in the 5'-to-3' order). Although expression profiles of these isoforms were highly variable among human tissues, three of them, PTCHa, PTCHb, and PTCHd, were predominantly expressed in most tissues, PTCHd being most ubiquitous. In contrast, PTCHb was always predominant and reached a maximum at E10.5 during mouse development. These three mRNA isoforms encode three PTCH proteins with distinct N-termini, PTCH(L), PTCH(M), and PTCH(S). The expression of these three isoforms was regulated by GLI transcription factors, and at least two functional GLI-binding sequences were identified, one in exon 1a and the other between exon 1a and exon 1b. PTCH(L) and PTCH(M) were equally active in terms of suppressing GLI-mediated transcription and inducing apoptosis. PTCH(S) protein (encoded by PTCHd), lacking the first transmembrane domain, was more unstable than the other two, resulting in a reduced activity. This study may shed light on the mechanism whereby a single PTCH gene plays a role in both tumor cell growth and embryonic development.