The mechanisms by which morphogens, such as Sonic hedgehog (Shh), specify distinct cell fates in a concentration-dependent manner are not fully understood. Shh signaling is regulated by a feedback network that comprises Shh-binding factors, the expression of which is controlled by the Hedgehog pathway itself. Recent studies have identified the hedgehog-binding protein growth arrest-specific gene 1 (Gas1) as a component of this network. Gas1 binds Shh to promote signaling, but its expression is subsequently inhibited by pathway activity. Gas1(-/-) mice display Shh dosage-dependent phenotypes in the neural tube, midface, and digits. Ectopic expression and in vitro assays indicate that Gas1 binds Shh synergistically with the Hedgehog receptor Patched1 and promotes signaling in a cell-autonomous fashion. Furthermore, Gas1 cooperates with another component of the feedback network, Cdo, in patterning the neural tube and midface. The coordinate regulation of the activity and expression of several different positively and negatively acting Shh binding proteins should result in fine-tuned modulation of graded Shh signaling.