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The Sonic Hedgehog (SHH) morphogen pathway is fundamental for embryonic development and stem cell maintenance and is implicated in various cancers. A key step in signaling is transfer of a palmitate group to the SHH N terminus, catalyzed by the multi-pass transmembrane enzyme Hedgehog acyltransferase (HHAT). We present the high-resolution cryo-EM structure of HHAT bound to substrate analog palmityl-coenzyme A and a SHH-mimetic megabody, revealing a heme group bound to HHAT that is essential for HHAT function. A structure of HHAT bound t