Hedgehog (Hh) signaling is involved in patterning and morphogenesis of most organs in the developing mammalian embryo. Despite many advances in understanding core components of the pathway, little is known about how the activity of the Hh pathway is adjusted in organ- and tissue-specific developmental processes. Mutations in EVC or EVC2 disrupt Hh signaling in tooth and bone development. Using mouse models, we show here that Evc and Evc2 are mutually required for localizing to primary cilia and also for maintaining their normal protein levels. Consistent with Evc and Evc2 functioning as a complex, the skeletal phenotypes in either single or double homozygous mutant mice are virtually indistinguishable. Smo translocation to the cilium was normal in Evc2-deficient chondrocytes following Hh activation with the Smo-agonist SAG. However, Gli3 recruitment to cilia tips was reduced and Sufu/Gli3 dissociation was impaired. Interestingly, we found Smo to co-precipitate with Evc/Evc2, indicating that in some cells Hh signaling requires direct interaction of Smo with the Evc/Evc2 complex. Expression of a dominantly acting Evc2 mutation previously identified in Weyer's acrodental dysostosis (Evc2Δ43) caused mislocalization of Evc/Evc2Δ43 within the cilium and also reproduced the Gli3-related molecular defects observed in Evc2(-/-) chondrocytes. Moreover, Evc silencing in Sufu(-/-) cells attenuated the output of the Hh pathway, suggesting that Evc/Evc2 also promote Hh signaling in the absence of Sufu. Together our data reveal that the Hh pathway involves Evc/Evc2-dependent modulations that are necessary for normal endochondral bone formation.