AbstractHedgehog signaling is central in embryonic development and tissue regeneration. Disruption of the pathway is linked to genetic diseases and cancer. Binding of the secreted ligand, Sonic hedgehog (ShhN) to its receptor Patched (PTCH1) activates the signaling pathway. Here, we describe a 3.4 Å cryo-EM structure of the human PTCH1 bound to ShhNC24II, a modified hedgehog ligand mimicking its palmitoylated form. The membrane-embedded part of PTCH1 is surrounded by ten sterol molecules at the inner and outer lipid bilayer portion of the protein. The annular sterols interact at multiple sites with both the sterol sensing domain, SSD, and the SSD-like domain, SSDL, which are located on opposite sides of PTCH1. The structure reveals a possible route for sterol translocation across the lipid bilayer by PTCH1 and homologous transporters.