Previously, we have described novel families of genes, warthog (wrt) and groundhog (grd), in Caenorhabditis elegans. They are related to Hedgehog (Hh) through the carboxy-terminal autoprocessing domain (called Hog or Hint). A comprehensive survey revealed 10 genes with Hog/Hint modules in C. elegans. Five of these are associated with a Wart domain in wrt genes, and three with multiple copies of the Ground domain in grd genes. Both the Wart domain and the Ground domain occur also in genes encoding no Hog domain. Further, we define a new group of genes related to the grd genes, called ground-like (grl). Overall, C. elegans has more than 50 genes belonging to these gene families. Phylogenetic and sequence analysis shows that the wrt, grd, and grl genes are derived from each other. Further examination reveals a sequence motif with similarity to the core of the amino-terminal-signaling domain of Hh proteins. Our data suggest that the wrt, grd, grl, and hh genes are derived from a single ancestral gene. wrt, grd, and grl genes are also present in other nematodes, but so far not in any other phyla. Conversely, hh is not found presently in C. elegans nor other nematodes. Thus, the nematode genes could be the homologs of Hh molecules in other phyla. The membrane molecule Patched has been shown previously to be a receptor of Hh. Many Patched-related proteins are present in C. elegans, which may be targets of the hh-related genes. No Hedgehog-interacting protein (Hip) was found. We analyzed the expression patterns of eight wrt and eight grd genes. The results show that some closely related genes are expressed in the same tissues, but, overall, the expression patterns are diverse, comprising hypodermis, seam cells, the excretory cell, sheath and socket cells, and different types of neurons.