Using RNAi screening, proteomics, cell biological and mouse genetics approaches, we have identified a complex of nine proteins, seven of which are disrupted in human ciliopathies. A transmembrane component, TMEM231, localizes to the basal body before and independently of intraflagellar transport in a Septin 2 (Sept2)-regulated fashion. The localizations of TMEM231, B9D1 (B9 domain-containing protein 1) and CC2D2A (coiled-coil and C2 domain-containing protein 2A) at the transition zone are dependent on one another and on Sept2. Disruption of the complex in vitro causes a reduction in cilia formation and a loss of signalling receptors from the remaining cilia. Mouse knockouts of B9D1 and TMEM231 have identical defects in Sonic hedgehog (Shh) signalling and ciliogenesis. Strikingly, disruption of the complex increases the rate of diffusion into the ciliary membrane and the amount of plasma-membrane protein in the cilia. The complex that we have described is essential for normal cilia function and acts as a diffusion barrier to maintain the cilia membrane as a compartmentalized signalling organelle.