Pancreatic ductal adenocarcinoma (PDA) constitutes a lethal disease that affects >30,000 people annually in the United States. Deregulation of Hedgehog signaling has been implicated in the pathogenesis of PDA. To gain insights into the role of the pathway during the distinct stages of pancreatic carcinogenesis, we established a mouse model in which Hedgehog signaling is activated specifically in the pancreatic epithelium. Transgenic mice survived to adulthood and developed undifferentiated carcinoma, indicating that epithelium-specific Hedgehog signaling is sufficient to drive pancreatic neoplasia but does not recapitulate human pancreatic carcinogenesis. In contrast, simultaneous activation of Ras and Hedgehog signaling caused extensive formation of pancreatic intraepithelial neoplasias, the earliest stages of human PDA tumorigenesis, and accelerated lethality. These results indicate the cooperation of Hedgehog and Ras signaling during the earliest stages of PDA formation. They also mark Hedgehog pathway components as relevant therapeutic targets for both early and advanced stages of pancreatic ductal neoplasia.