The morphogen Sonic Hedgehog (SHH) patterns tissues during development by directing cell fates in a concentration-dependent manner. The SHH signal is transmitted across the membrane of target cells by the heptahelical transmembrane protein Smoothened (SMO), which activates the GLI family of transcription factors through a mechanism that is undefined in vertebrates. Using CRISPR-edited null alleles and small molecule inhibitors, we systematically analyzed the epistatic interactions between SMO and three proteins implicated in SMO signaling: the heterotrimeric G-protein subunit GαS, G protein–coupled receptor kinase 2 (GRK2), and the GαS-coupled receptor GPR161. Our experiments uncovered a signaling mechanism that modifies the sensitivity of target cells to SHH and consequently changes the shape of the SHH dose-response curve. In both fibroblasts and spinal neural progenitors, the loss of GPR161, previously implicated as an inhibitor of basal SHH signaling, increased the sensitivity of target cells across the entire spectrum of SHH concentrations. Surprisingly, GRK2, thought to function by antagonizing GPR161, and Gαs, which is activated by GPR161, influenced SHH signaling even in cells lacking GPR161. We propose that the sensitivity of target cells to Hedgehog (Hh) morphogens, and the consequent effects on gene expression and differentiation outcomes, can be controlled by signals from G-protein coupled receptors that converge on Gαs and Protein Kinase A.