The final step in Hedgehog (Hh) signal transduction is post-translational regulation of the transcription factor, Cubitus interruptus (Ci). Ci resides in the cytoplasm in a latent form, where Hh regulates its processing into a transcriptional repressor or its nuclear access as a transcriptional activator. Levels of latent Ci are controlled by degradation, with different pathways activated in response to different levels of Hh. Here, we describe the roadkill (rdx) gene, which is expressed in response to Hh. The Rdx protein belongs to a conserved family of proteins that serve as substrate adaptors for Cullin3-mediated ubiquitylation. Overexpression of rdx reduced Ci levels and decreased both transcriptional activation and repression mediated by Ci. Loss of rdx allowed excessive accumulation of Ci. rdx manipulation in the eye revealed a novel role for Hh in the organization and survival of pigment and cone cells. These studies identify rdx as a limiting factor in a feedback loop that attenuates Hh responses through reducing levels of Ci. The existence of human orthologs for Rdx raises the possibility that this novel feedback loop also modulates Hh responses in humans.