Hedgehog (Hh) signaling is a key regulatory pathway during development and also has a functional role in mature neurons. Here, we show that Hh signaling regulates the odor response in adult Drosophila olfactory sensory neurons (OSNs). We demonstrate that this is achieved by regulating odorant receptor (OR) transport to and within the primary cilium in OSN neurons. Regulation relies on ciliary localization of the Hh signal transducer Smoothened (Smo). We further demonstrate that the Hh- and Smo-dependent regulation of the kinesin-like protein Cos2 acts in parallel to the intraflagellar transport system (IFT) to localize ORs within the cilium compartment. These findings expand our knowledge of Hh signaling to encompass chemosensory modulation and receptor trafficking.