Inhibition of Sonic hedgehog (Shh) signaling is of great clinical interest. Here we exploit Hedgehog acyltransferase (Hhat)-mediated Shh palmitoylation, a modification critical for Shh signaling, as a new target for Shh pathway inhibition. A target-oriented high-throughput screen was used to identify small-molecule inhibitors of Hhat. In cells, these Hhat inhibitors specifically block Shh palmitoylation and inhibit autocrine and paracrine Shh signaling.