The Hedgehog (Hh) family of secreted proteins governs cell growth and patterning in animal development. The Hh signal is transduced by the seven-transmembrane protein Smoothened (Smo); however, the mechanism by which Smo is regulated remains largely unknown. Here we show that protein kinase A (PKA) and casein kinase I (CKI) regulate Smo cell-surface accumulation and activity in response to Hh. Blocking PKA or CKI activity in the Drosophila wing disc prevents Hh-induced Smo accumulation and attenuates pathway activity, whereas increasing PKA activity promotes Smo accumulation and pathway activation. We show that PKA and CKI phosphorylate Smo at several sites, and that phosphorylation-deficient forms of Smo fail to accumulate on the cell surface and are unable to transduce the Hh signal. Conversely, phosphorylation-mimicking Smo variants show constitutive cell-surface expression and signalling activity. Furthermore, we find that the levels of Smo cell-surface expression and activity correlate with its levels of phosphorylation. Our data indicate that Hh induces progressive Smo phosphorylation by PKA and CKI, leading to elevation of Smo cell-surface levels and signalling activity.