The Hedgehog (Hh) pathway plays critical roles in normal development and in tumorigenesis. We generated Gli-luciferase transgenic mice to evaluate the Smo inhibitor, HhAntag, by whole animal functional imaging. HhAntag rapidly reduced systemic luciferase activity in 10- to 14-day-old mice following oral dosing. Although pathway activity was restored 2 days after drug removal, brief inhibition caused permanent defects in bone growth. HhAntag inhibited proliferation and promoted differentiation of chondrocytes, leading to dramatic expansion of the hypertrophic zone. After drug removal, osteoblasts invaded the cartilage plate, mineralization occurred, and there was premature fusion of the growth plate resulting in permanent disruption of bone epiphyses.