The evolutionarily conserved Hedgehog (Hh) signaling pathway is transduced by the Cubitus interruptus (Ci)/Gli family of transcription factors that exist in two distinct repressor (Ci(R)/Gli(R)) and activator (Ci(A)/Gli(A)) forms. Aberrant activation of Hh signaling is associated with various human cancers, but the mechanism through which Ci(R)/Gli(R) properly represses target gene expression is poorly understood. Here, we used Drosophila melanogaster and zebrafish models to define a repressor function of Atrophin (Atro) in Hh signaling. Atro directly bound to Ci through its C terminus. The N terminus of Atro interacted with a histone deacetylase, Rpd3, to recruit it to a Ci-binding site at the decapentaplegic (dpp) locus and reduce dpp transcription through histone acetylation regulation. The repressor function of Atro in Hh signaling was dependent on Ci. Furthermore, Rerea, a homologue of Atro in zebrafish, repressed the expression of Hh-responsive genes. We propose that the Atro-Rpd3 complex plays a conserved role to function as a Ci(R) corepressor.