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The sonic hedgehog (SHH) pathway regulates the development of the central nervous system in vertebrates. Aberrant regulation of SHH signaling pathways often causes neurodevelopmental diseases and brain tumors. In the cerebellum, SHH secreted by Purkinje cells is a potent mitogen for granule cell progenitors, which are the most abundant cell type in the mature brain. While a reduction in SHH signaling induces cerebellar structural abnormalities, such as hypoplasia in various genetic disorders, the constitutive activation of SHH signaling often induces medulloblastoma (MB), one of the most common pediatric malignant brain tumors. Based on the existing literature on canonical and non-canonical SHH signaling pathways, emerging basic and clinical studies are exploring novel therapeutic approaches for MB by targeting SHH signaling at distinct molecular levels. In this review, we discuss the present consensus on SHH signaling mechanisms, their roles in cerebellar development and tumorigenesis, and the recent advances in clinical trials for MB.