In this chapter, we review the current literature that focuses on the role of Sonic hedgehog (Shh) signaling, a major morphogenic pathway regulating embryonic development, in the pathology of fetal alcohol spectrum disorder (FASD), caused by prenatal alcohol exposure (PAE). Ethanol exposure disrupts Shh signaling during development across a range of species including in mice, chick, and zebrafish. Ethanol appears to interfere with Shh signaling through multiple mechanisms, both direct and indirect, including reduced Shh ligand production, impaired post-translational processing, and inducing apoptosis in Shh-expressing cells during gastrulation. These disruptions result in a spectrum of developmental defects characteristic of FASD, such as craniofacial abnormalities, brain malformations, and limb deformities. Genetic susceptibility to PAE is linked to mutations in Shh pathway components. Activation of Shh signaling, genetically or pharmacologically, has been effective in mitigating ethanol-induced defects. This chapter also examines the teratogenic effects of cannabinoids (CBs) and ethanol, which synergistically disrupt Shh signaling. CBs directly interact with Smoothened, a key Shh receptor, amplifying developmental defects when combined with ethanol exposure. This chapter details the critical role of Shh signaling in embryogenesis and its vulnerability to environmental teratogens such as ethanol and CBs.