Growing evidence shows that alterations occurring at early developmental stages contribute to symptoms manifested in adulthood in the setting of neurodegenerative diseases. Here, we studied the molecular mechanisms causing giant axonal neuropathy (GAN), a severe neurodegenerative disease due to loss-of-function of the gigaxonin-E3 ligase. We showed that gigaxonin governs Sonic Hedgehog (Shh) induction, the developmental pathway patterning the dorso-ventral axis of the neural tube and muscles, by controlling the degradation of the Shh-bound Patched receptor. Similar to Shh inhibition, repression of gigaxonin in zebrafish impaired motor neuron specification and somitogenesis and abolished neuromuscular junction formation and locomotion. Shh signaling was impaired in gigaxonin-null zebrafish and was corrected by both pharmacological activation of the Shh pathway and human gigaxonin, pointing to an evolutionary-conserved mechanism regulating Shh signaling. Gigaxonin-dependent inhibition of Shh activation was also demonstrated in primary fibroblasts from patients with GAN and in a Shh activity reporter line depleted in gigaxonin. Our findings establish gigaxonin as a key E3 ligase that positively controls the initiation of Shh transduction, and reveal the causal role of Shh dysfunction in motor deficits, thus highlighting the developmental origin of GAN.