The Hedgehog (Hh) signaling pathway plays multiple essential roles during metazoan development, homeostasis, and disease. Although core protein components are highly conserved, the variations in Hh signal transduction mechanisms exhibited by existing model systems (Drosophila, fish, and mammals) are difficult to understand. We characterize the Hh pathway in planarians. Hh signaling is essential for establishing the Anterior/Posterior axis during regeneration by modulating wnt expression. Moreover, RNAi methods to reduce signal transduction proteins Cos2/Kif27/Kif7, Fused, or Iguana do not result in detectable Hh signaling defects; however, these proteins are essential for planarian ciliogenesis. Our study expands the understanding of Hh signaling in the animal kingdom and suggests an ancestral mechanistic link between Hh signaling and the function of cilia.