Hair follicle morphogenesis requires precisely controlled reciprocal communications, including hedgehog (Hh) signaling. Activation of the Hh signaling pathway relies on the primary cilium. Disrupting ciliogenesis results in hair follicle morphogenesis defects due to attenuated Hh signaling; however, the loss of cilia makes it impossible to determine whether hair follicle phenotypes in these cilia mutants are caused by the loss of cilia, disruption of Hh signaling, or a combination of these events. In this study, we characterized the function of Ift27, which encodes a subunit of intraflagellar transport (IFT) complex B. Hair follicle morphogenesis of Ift27-null mice was severely impaired, reminiscent of phenotypes observed in cilia and Hh mutants. Furthermore, the Hh signaling pathway was attenuated in Ift27 mutants, which was in association with abnormal ciliary trafficking of SMO and GLI2, and impaired processing of Gli transcription factors; however, formation of the ciliary axoneme was unaffected. The ciliary localization of IFT25 (HSPB11), the binding partner of IFT27, was disrupted in Ift27 mutant cells, and Ift25-null mice displayed hair follicle phenotypes similar to those of Ift27 mutants. These data suggest that Ift27 and Ift25 operate in a genetically and functionally dependent manner during hair follicle morphogenesis. This study suggests that the molecular trafficking machineries underlying ciliogenesis and Hh signaling can be segregated, thereby providing important insights into new avenues of inhibiting Hh signaling, which might be adopted in the development of targeted therapies for Hh-dependent cancers, such as basal cell carcinoma.