Members of the four-member C-terminal EPS15-Homology Domain-containing (EHD) protein family play crucial roles in endocytic recycling of cell surface receptors from endosomes to the plasma membrane. In this study, we show that Ehd1 gene knockout in mice on a predominantly B6 background is embryonic lethal. Ehd1-null embryos die at mid-gestation with a failure to complete key developmental processes including neural tube closure, axial turning and patterning of the neural tube. We found that Ehd1-null embryos display short and stubby cilia on the developing neuroepithelium at embryonic day 9.5 (E9.5). Loss of EHD1 also deregulates the ciliary SHH signaling with Ehd1-null embryos displaying features indicative of increased SHH signaling, including a significant downregulation in the formation of the GLI3 repressor and increase in the ventral neuronal markers specified by SHH. Using Ehd1-null MEFS we found that EHD1 protein co-localizes with the SHH receptor Smoothened in the primary cilia upon ligand stimulation. Under the same conditions, EHD1 was shown to co-traffic with Smoothened into the developing primary cilia and we identify EHD1 as a direct binding partner of Smoothened. Overall, our studies identify the endocytic recycling regulator EHD1 as a novel regulator of the primary cilium-associated trafficking of Smoothened and Hedgehog signaling.