Cellular signaling initiated by Hedgehog binding to Patched1 has profound importance in mammalian embryogenesis, genetic disease, and cancer. Hedgehog acts as a morphogen to specify distinctive cell fates using different concentration thresholds, but our knowledge of how the concentration gradient is interpreted into the activity gradient is incomplete. The membrane protein Growth Arrest-Specific Gene 1 (GAS1) was thought to be a negative regulator of the Hedgehog concentration gradient. Here, we report unexpected genetic evidence that Gas1 positively regulates Hedgehog signaling in multiple developmental contexts, an effect particularly noticeable at regions where Hedgehog acts at low concentration. Using a combination of in vitro cell culture and in ovo electroporation assays, we demonstrate that GAS1 acts cooperatively with Patched1 for Hedgehog binding and enhances signaling activity in a cell-autonomous manner. Our data support a model in which GAS1 helps transform the Hedgehog protein gradient into the observed activity gradient. We propose that Gas1 is an evolutionarily novel, vertebrate-specific Hedgehog pathway regulator.