Hedgehog (Hh) proteins specify tissue pattern in metazoan embryos by forming gradients that emanate from discrete sites of expression and elicit concentration-dependent cellular differentiation or proliferation responses1,2. Cellular responses to Hh and the movement of Hh through tissues are both precisely regulated, and abnormal Hh signaling has been implicated in human birth defects and cancer3-7. Hh signaling is mediated by its N-terminal domain (HhN), which is dually lipidated and secreted as part of a multivalent lipoprotein particle8-10. Reception of the HhN signal is modulated by several cell-surface proteins on responding cells, including Patched (Ptc), Smoothened (Smo), Ihog/CDO and the vertebrate-specific proteins Hip and Gas111. Drosophila Ihog and its vertebrate homologs CDO and BOC contain multiple immunoglobulin (Ig) and fibronectin type III (FNIII) repeats, and the first FNIII repeat of Ihog binds Drosophila HhN in a heparin-dependent manner12,13. Surprisingly, pull-down experiments suggest that mammalian Sonic hedgehog (ShhN) binds a nonorthologous FNIII repeat of CDO12,14. We report here biochemical, biophysical, and X-ray structural studies of a complex between ShhN and the third FNIII repeat of CDO. We show that the ShhN-CDO interaction is completely unlike the HhN-Ihog interaction and requires calcium, which binds at a previously undetected site on ShhN. This site is conserved in nearly all Hh proteins and is a hot spot for mediating interactions between ShhN and CDO, Ptc, Hip, and Gas1. Mutations in vertebrate Hh proteins causing holoprosencephaly and brachydactyly type A1 map to this calcium-binding site and disrupt interactions with these partners.