Hedgehog (Hh) signals regulate invertebrate and vertebrate development, yet the role of the cascade in adipose development was undefined. To analyze a potential function, we turned to Drosophila and mammalian models. Fat-body-specific transgenic activation of Hh signaling inhibits fly fat formation. Conversely, fat-body-specific Hh blockade stimulated fly fat formation. In mammalian models, sufficiency and necessity tests showed that Hh signaling also inhibits mammalian adipogenesis. Hh signals elicit this function early in adipogenesis, upstream of PPARgamma, potentially diverting preadipocytes as well as multipotent mesenchymal prescursors away from adipogenesis and toward osteogenesis. Hh may elicit these effects by inducing the expression of antiadipogenic transcription factors such as Gata2. These data support the notion that Hh signaling plays a conserved role, from invertebrates to vertebrates, in inhibiting fat formation and highlighting the potential of the Hh pathway as a therapeutic target for osteoporosis, lipodystrophy, diabetes, and obesity.