Summary: Basal cell carcinomas (BCCs) frequently possess immense mutational burdens; however, the functional significance of most of these mutations remains unclear. Here, we report that loss of Ptch1, the most common mutation that activates upstream Hedgehog (Hh) signaling, initiates the formation of nascent BCC-like tumors that eventually enter into a dormant state. However, rare tumors that overcome dormancy acquire the ability to hyperactivate downstream Hh signaling through a variety of mechanisms, including amplification of Gli1/2 and upregulation of Mycn. Furthermore, we demonstrate that MYCN overexpression promotes the progression of tumors induced by loss of Ptch1. These findings suggest that canonical mutations that activate upstream Hh signaling are necessary, but not sufficient, for BCC to fully progress. Rather, tumors likely acquire secondary mutations that further hyperactivate downstream Hh signaling in order to escape dormancy and enter a trajectory of uncontrolled expansion.