Osteoarthritis is associated with the irreversible degeneration of articular cartilage. Notably, in this condition, articular cartilage chondrocytes undergo phenotypic and gene expression changes that are reminiscent of their end-stage differentiation in the growth plate during skeletal development. Hedgehog (Hh) signaling regulates normal chondrocyte growth and differentiation; however, the role of Hh signaling in chondrocytes in osteoarthritis is unknown. Here we examine human osteoarthritic samples and mice in which osteoarthritis was surgically induced and find that Hh signaling is activated in osteoarthritis. Using several genetically modified mice, we found that higher levels of Hh signaling in chondrocytes cause a more severe osteoarthritic phenotype. Furthermore, we show in mice and in human cartilage explants that pharmacological or genetic inhibition of Hh signaling reduces the severity of osteoarthritis and that runt-related transcription factor-2 (RUNX2) potentially mediates this process by regulating a disintegrin and metalloproteinase with thrombospondin type 1 motif-5 (ADAMTS5) expression. Together, these findings raise the possibility that Hh blockade can be used as a therapeutic approach to inhibit articular cartilage degeneration.