Basal cell carcinoma is the most common human malignancy in populations of European origin, and Australia has the highest incidence of basal cell carcinoma in the world. Great advances in the understanding of the genetics of this cancer have occurred in recent years. Mutations of the patched 1 gene (PTCH1) lead to basal cell carcinoma predisposition in Gorlin syndrome. PTCH1 is part of the hedgehog signalling pathway, and derangements within this pathway are now known to be important in the carcinogenesis of many different cancers including sporadic basal cell carcinoma. The molecular biology of the hedgehog pathway is discussed, and mouse models of basal cell carcinoma based on this pathway are explored. New developments in non-surgical treatment of basal cell carcinoma are based on this knowledge. Other genes of importance to basal cell carcinoma development include the tumour suppressor gene P53 and the melanocortin-1 receptor gene. In addition, we discuss molecules of possible importance such as the glutathione-S-transferases, DNA repair genes, cyclin-dependent kinase inhibitor 2A, Brahma and connexins. Evidence of familial aggregation of this cancer is explored and supports the possibility of genetic predisposition to this common malignancy.