Hedgehog (Hh) signaling plays fundamental roles in morphogenesis, tissue repair, and human disease. Initiation of Hh signaling is controlled by the interaction of two multipass membrane proteins, patched (Ptc) and smoothened (Smo). Recent studies identify Smo as a G-protein coupled receptor (GPCR)-like protein that signals through large G-protein complexes which contain the Gi subunit. We hypothesize Regulator of G-Protein Signaling (RGS) proteins, and specifically RGS5, are endogenous repressors of Hh signaling via their ability to act as GTPase activating proteins (GAPs) for GTP-bound Gi, downstream of Smo. In support of this hypothesis, we demonstrate that RGS5 over-expression inhibits sonic hedgehog (Shh)-mediated signaling and osteogenesis in C3H10T1/2 cells. Conversely, signaling is potentiated by siRNA-mediated knock-down of RGS5 expression, but not RGS4 expression. Furthermore, using immuohistochemical analysis and co-immunoprecipitation (Co-IP), we demonstrate that RGS5 is present with Smo in primary cilia. This organelle is required for canonical Hh signaling in mammalian cells, and RGS5 is found in a physical complex with Smo in these cells. We therefore conclude that RGS5 is an endogenous regulator of Hh-mediated signaling and that RGS proteins are potential targets for novel therapeutics in Hh-mediated diseases.