The G protein-coupled receptor (GPCR)-like molecule Smoothened (Smo) undergoes dynamic intracellular trafficking modulated by the microtubule associated kinase GRK2 and recruitment of β-arrestin. Of this trafficking, especially the translocation of Smo into primary cilia and back to the cytoplasm is essential for the activation of Hedgehog (Hh) signaling in vertebrates. The complete mechanism of this bidirectional transport, however, is not completely understood. Here we demonstrate that Growth Arrest Specific 8 (Gas8), a microtubule associated subunit of the Dynein Regulatory Complex (DRC), interacts with Smo to modulate this process. Gas8 knockdown in ciliated cells reduces Smo signaling activity and ciliary localization whereas overexpression stimulates Smo activity in a GRK2-dependent manner. The C terminus of Gas8 is important for both Gas8 interaction with Smo and facilitating Smo signaling. In zebrafish, knocking down Gas8 results in attenuated Hh transcriptional responses and impaired early muscle development. These effects can be reversed by the co-injection of Gas8 mRNA or by constitutive activation of the downstream Gli transcription factors. Furthermore, Gas8 and GRK2 display a synergistic effect on zebrafish early muscle development and some effects of GRK2 knockdown can be rescued by Gas8 mRNA. Interestingly, Gas8 does not interfere with cilia assembly, as the primary cilia architecture is unchanged upon Gas8 knock down or heterologous expression. This is in contrast to cells stably expressing both GRK2 and Smo, in which cilia are significantly elongated. These results identify Gas8 as a positive regulator of Hh signaling that cooperates with GRK2 to control Smo signaling.