Summary The G protein-coupled receptor Smoothened (Smo) is the signal transducer of the Sonic Hedgehog (Shh) pathway. Smo signals through G protein-dependent and independent routes, with G protein-independent canonical signaling to Gli effectors requiring Smo accumulation in the primary cilium. Mechanisms controlling Smo activation and trafficking are not yet clear, but likely entail small-molecule binding to pockets in its extracellular cysteine-rich domain (CRD) and/or transmembrane bundle. Herein we demonstrate cytosolic phospholipase cPLA2α is activated through Gβγ downstream of Smo to release arachidonic acid. Arachidonic acid binds Smo and synergizes with CRD-binding agonist, promoting Smo ciliary trafficking and high-level signaling. Chemical or genetic cPLA2α inhibition dampens Smo signaling to Gli, revealing an unexpected contribution of G protein-dependent signaling to canonical pathway activity. Arachidonic acid displaces the Smo transmembrane domain inhibitor cyclopamine to rescue CRD agonist-induced signaling, suggesting arachidonic acid may target the transmembrane bundle to allosterically enhance signaling by CRD agonist-bound Smo.