Sonic hedgehog signaling regulates processes of embryonic development across multiple tissues, yet factors regulating context-specific Shh signaling remain poorly understood. Exome sequencing of families with polymicrogyria (disordered cortical folding) revealed multiple individuals with biallelic deleterious variants in TMEM161B, which encodes a multi-pass transmembrane protein of unknown function. Tmem161b null mice demonstrated holoprosencephaly, craniofacial midline defects, eye defects, and spinal cord patterning changes consistent with impaired Shh signaling, but were without limb defects, suggesting a CNS-specific role of Tmem161b. Tmem161b depletion impaired the response to Smoothened activation invitro and disrupted cortical histogenesis invivo in both mouse and ferret models, including leading to abnormal gyration in the ferret model. Tmem161b localizes non-exclusively to the primary cilium, and scanning electron microscopy revealed shortened, dysmorphic, and ballooned ventricular zone cilia in the Tmem161b null mouse, suggesting that the Shh-related phenotypes may reflect ciliary dysfunction. Our data identify TMEM161B as a regulator of cerebral cortical gyration, as involved in primary ciliary structure, as a regulator of Shh signaling, and further implicate Shh signaling in human gyral development.