Drosophila HMGCoA reductase (hmgcr) catalyzes the biosynthesis of a mevalonate precursor for isoprenoids and has been implicated in the production of a signal by the somatic gonadal precursor cells (SGPs) that attracts migrating germ cells. Here, we show that hmgcr functions in the hedgehog (hh) signaling pathway. When hmgcr activity is reduced, high levels of Hh accumulate in hh-expressing cells in each parasegment, while the adjacent "Hh-receiving" cells cannot sustain wg expression and fail to relocalize the Smoothened (Smo) receptor. Conversely, ectopic Hmgcr upregulates Hh signaling when it is produced in hh-expressing cells, but has no effect when produced in the receiving cells. These findings suggest that Hmgcr might orchestrate germ cell migration by promoting the release and/or transport of Hh from the SGPs. Consistent with this model, there are substantial germ cell migration defects in trans combinations between hmgcr and mutations in different components of the hh pathway.