The Sonic Hedgehog (Shh) pathway conducts primarily in the primary cilium and plays important roles in cell proliferation, individual development, and tumorigenesis. Shh ligand binding with its ciliary membrane-localized transmembrane receptor Patched1 results in the removal of Patched1 from and the translocation of the transmembrane oncoprotein Smoothened into the cilium, leading to Shh signaling activation. However, how these processes are coupled remains unknown. Here, we show that the Patched1-ArhGAP36-PKA-Inversin axis determines the ciliary translocation of Smoothened. We find that Patched1 interacts with and stabilizes the PKA negative regulator ArhGAP36 to the centrosome. Activating the Shh pathway results in the removal of ArhGAP36 from the mother centriole and the centrosomal PKA accumulation. This PKA then phosphorylates Inversin and promotes its interaction with and the ciliary translocation of Smoothened. Knockdown of Inversin disrupts the ciliary translocation of Smoothened and Shh pathway activation. These findings reveal a regulatory molecular mechanism for the initial step of Shh pathway activation.