The Hedgehog (Hh) signaling pathway governs cell growth and patterning in animal development. Malfunction of several pathway components, including the key transcriptional effector Ci/Gli proteins, leads to a variety of human disorders including several malignancies. Ci/Gli activity is controlled by multi-layered regulatory mechanisms, the most prominent of which is the ubiquitin-mediated proteolysis. In the absence of Hh, Ci/Gli is proteolytically processed into a truncated form that functions as a transcriptional repressor of the Hh pathway. Ci processing is mediated by an SCF (Skip1/Cul1/F-box protein) ubiquitin ligase in which the F-box protein Slimb/beta-TRCP bridges Ci to the ubiquitin ligase. Recent studies in Drosophila and mammalian cultured cells have demonstrated that sequential phosphorylation of Ci/Gli by PKA, GSK3, and CKI creates multiple docking sites that can recruit SCF(Slimb/beta-TRCP), which then promotes Ci/Gli ubiquitination followed by proteasome-mediated processing. Recently, an E3 ubiquitin ligase consisting of the BTB (Broad Complex, Tramtrack, and Bric a Brac) protein HIB (Hh induced MATH and BTB protein) and Cullin 3 (Cul3) has been identified that acts in a negative feedback loop to fine-tune Hh signaling responses by degrading full length Ci. In eye imaginal discs where Hh signals coordinate cell proliferation and differentiation, HIB is highly expressed in the differentiating cells to prevent aberrant Hh signaling activity and ensure normal eye development. Tissue- and developmental stage-specific expression of HIB and its homologs in vertebrates may provide a conserved mechanism for ensuring precision in spatial and temporal control of Hh signaling.