Alterations in Hedgehog (Hh) signaling lead to birth defects and cancers including medulloblastoma, the most common pediatric brain tumor. Although inhibitors targeting the membrane protein Smoothened suppress Hh signaling, acquired drug resistance and tumor relapse call for additional therapeutic targets. Here we show that phosphodiesterase 4D (PDE4D) acts downstream of Neuropilins to control Hh transduction and medulloblastoma growth. PDE4D interacts directly with Neuropilins, positive regulators of Hh pathway. The Neuropilin ligand Semaphorin3 enhances this interaction, promoting PDE4D translocation to the plasma membrane and cAMP degradation. The consequent inhibition of protein kinase A (PKA) enhances Hh transduction. In the developing cerebellum, genetic removal of Neuropilins reduces Hh signaling activity and suppresses proliferation of granule neuron precursors. In mouse medulloblastoma allografts, PDE4D inhibitors suppress Hh transduction and inhibit tumor growth. Our findings reveal a new regulatory mechanism of Hh transduction, and highlight PDE4D as a promising target to treat Hh-related tumors.