Primary cilia are present on mammalian neurons and glia, but their function is largely unknown. We generated conditional homozygous mutant mice for a gene we termed Stumpy. Mutants lack cilia and have conspicuous abnormalities in postnatally developing brain regions, including a hypoplasic hippocampus characterized by a primary deficiency in neural stem cells known as astrocyte-like neural precursors (ALNPs). Previous studies suggested that primary cilia mediate sonic hedgehog (Shh) signaling. Here, we find that loss of ALNP cilia leads to abrogated Shh activity, increased cell cycle exit, and morphological abnormalities in ALNPs. Processing of Gli3, a mediator of Shh signaling, is also altered in the absence of cilia. Further, key mediators of the Shh pathway localize to ALNP cilia. Thus, selective targeting of Shh machinery to primary cilia confers to ALNPs the ability to differentially respond to Shh mitogenic signals compared to neighboring cells. Our data suggest these organelles are cellular "antennae" critically required to modulate ALNP behavior.