Smoothened (Smo), a distant relative of G protein-coupled receptors, mediates Hedgehog (Hh) signaling during embryonic development and can initiate or transmit ligand-independent pathway activation in tumorigenesis. Although the cellular mechanisms that regulate Smo function remain unclear, the direct inhibition of Smo by cyclopamine, a plant-derived steroidal alkaloid, suggests that endogenous small molecules may be involved. Here we demonstrate that SAG, a chlorobenzothiophene-containing Hh pathway agonist, binds to the Smo heptahelical bundle in a manner that antagonizes cyclopamine action. In addition, we have identified four small molecules that directly inhibit Smo activity but are structurally distinct from cyclopamine. Functional and biochemical studies of these compounds provide evidence for the small molecule modulation of Smo through multiple mechanisms and yield insights into the physiological regulation of Smo activity. The mechanistic differences between the Smo antagonists may be useful in the therapeutic manipulation of Hh signaling.