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Impaired osteoblast differentiation may result in bone metabolic diseases such as osteoporosis. It was reported recently that hedgehog (Hh) signaling and autophagy are two important regulators of bone differentiation. In order to further dissect their relationship in bone development, we used a zebrafish larvae model to investigate how disruption of one of these signals affects the function of the other and impacts osteoblast differentiation. Our results showed that activation of Hh signaling negatively regulated autophagy. However, suppression of autophagy by knocking down atg5 expression did not alter Hh signaling, but dramatically upregulated the expression of osteoblast-related genes and increased bone mineralization, especially in the den region. On the contrary, inhibition of the Hh signaling pathway by cyclopamine treatment suppressed the expression of osteoblast-related genes and decreased bone mineralization. In agreement with these findings, blocking Hh signaling through knockdown SHH and Gli2 genes led to defective osteoblast differentiation, while promoting Hh signaling by knockdown Ptch1 was beneficial to osteoblast differentiation. Our results thus support that activation of the Hh signaling pathway negatively regulates autophagy and consequentially promotes osteoblast differentiation. On the contrary, induction of autophagy inhibits osteoblast differentiation. Our work reveals the mechanism underlying Hh signaling pathway regulation of bone development., Summary: Our report of an essential regulation role of hedgehog signaling and autophagy on osteoblast differentiation may contribute to research on bone development biology, hedgehog signaling and the autophagy pathway.