During development, dynamic remodeling of the actin cytoskeleton allows the precise placement and morphology of tissues. Morphogens such as Sonic hedgehog (Shh) and local cues such as receptor protein tyrosine phosphatases (RPTPs) mediate this process, but how they regulate the cytoskeleton is poorly understood. We previously identified Basal cell carcinoma–enriched gene 4 (BEG4)/Missing in Metastasis (MIM), a Shh-inducible, Wiskott-Aldrich homology 2 domain–containing protein that potentiates Gli transcription (Callahan, C.A., T. Ofstad, L. Horng, J.K. Wang, H.H. Zhen, P.A. Coulombe, and A.E. Oro. 2004. Genes Dev. 18:2724–2729). Here, we show that endogenous MIM is induced in a patched1-dependent manner and regulates the actin cytoskeleton. MIM functions by bundling F-actin, a process that requires self-association but is independent of G-actin binding. Cytoskeletal remodeling requires an activation domain distinct from sequences required for bundling in vitro. This domain associates with RPTPδ and, in turn, enhances RPTPδ membrane localization. MIM-dependent cytoskeletal changes can be inhibited using a soluble RPTPδ-D2 domain. Our data suggest that the hedgehog-responsive gene MIM cooperates with RPTP to induce cytoskeletal changes.