Sonic hedgehog (Shh) signaling is essential for proliferation of cerebellar granule cell progenitors (GCPs) and its misregulation is linked to various disorders, including cerebellar cancer medulloblastoma. The effects of Shh pathway are mediated by the Gli family of transcription factors, which controls the expression of a number of target genes, including Gli1. Here, we identify Mastermind-like 1 (Maml1) as a novel regulator of the Shh signaling since it interacts with Gli proteins, working as a potent transcriptional coactivator. Notably, Maml1 silencing results in a significant reduction of Gli target genes expression, with a negative impact on cell growth of NIH3T3 and Patched1-/- mouse embryonic fibroblasts (MEFs), bearing a constitutively active Shh signaling. Remarkably, Shh pathway activity results severely compromised both in MEFs and GCPs deriving from Maml1-/- mice with an impairment of GCPs proliferation and cerebellum development. Therefore Maml1-/- phenotype mimics aspects of Shh pathway deficiency, suggesting an intrinsic requirement for Maml1 in cerebellum development. The present study shows a new role for Maml1 as a component of Shh signaling, which plays a crucial role in both development and tumorigenesis.