AbstractTP53andRB1loss-of-function mutations are common in osteosarcoma. During development, combined loss of TP53 and RB1 function leads to downregulation of autophagy and the aberrant formation of primary cilia, cellular organelles essential for the transmission of canonical Hedgehog (Hh) signaling. Excess cilia formation then leads to hypersensitivity to Hedgehog (Hh) ligand signaling. In mouse and human models, we now show that osteosarcomas with mutations inTP53andRB1exhibit enhanced ligand-dependent Hh pathway activation through Smoothened (SMO), a transmembrane signaling molecule required for activation of the canonical Hh pathway. This dependence is mediated by hypersensitivity to Hh ligand and is accompanied by impaired autophagy and increased primary cilia formation and expression of Hh ligand in vivo. Using a conditional genetic mouse model ofTrp53andRb1inactivation in osteoblast progenitors, we further show that deletion ofSmoconverts the highly malignant osteosarcoma phenotype to benign, well differentiated bone tumors. Conversely, conditional overexpression of SHH ligand, or a gain-of-function SMO mutant in committed osteoblast progenitors during development blocks terminal bone differentiation. Finally, we demonstrate that the SMO antagonist sonidegib (LDE225) induces growth arrest and terminal differentiation in vivo in osteosarcomas that express primary cilia and Hh ligand combined with mutations in TP53. These results provide a mechanistic framework for aberrant Hh signaling in osteosarcoma based on defining mutations in the tumor suppressor, TP53.