Secreted Hedgehog (Hh) proteins control many aspects of growth and patterning in animal development. The mechanism by which the Hh signal is sent and transduced is still not well understood. We describe a genetic screen aimed at identifying positive regulators in the hh pathway. We recovered multiple new alleles of hh and dispatched (disp). In addition, we identified a novel component in the hh pathway, which we name central missing (cmn). Loss-of-function mutations in cmn cause similar patterning defects to those caused by hh or dispatched (disp) mutations. Moreover, cmn affects the expression of hh responsive genes but not of hh itself. Like disp, cmn acts upstream of patched (ptc) and its activity is required only in the Hh secreting cells. However, unlike disp, which is required for the release of the cholesterol-modified form of Hh, cmn regulates the activity of Hh in a manner that is independent of cholesterol modification. Finally, we show that cmn mutations bear molecular lesions in CG11495, which encodes a putative membrane bound acyltransferase related to Porcupine, a protein implicated in regulating the secretion of Wingless (Wg) signal.