Sonic hedgehog (Shh) signaling plays a critical role during development and carcinogenesis. While Gli family members govern the transcriptional output of Shh signaling, little is known how Gli-mediated transcriptional activity is regulated. Here we identify the actin-binding protein Missing in Metastasis (MIM) as a new Shh-responsive gene. Together, Gli1 and MIM recapitulate Shh-mediated epidermal proliferation and invasion in regenerated human skin. MIM is part of a Gli/Suppressor of Fused complex and potentiates Gli-dependent transcription using domains distinct from those used for monomeric actin binding. These data define MIM as both a Shh-responsive gene and a new member of the pathway that modulates Gli responses during growth and tumorigenesis.