Protein kinase A (PKA) phosphorylates Gli proteins, acting as a negative regulator of the Hedgehog pathway. PKA was recently detected within the cilium, and PKA activity specifically in cilia regulates Gli processing. Using a cilia-targeted genetically encoded sensor, we found significant basal PKA activity. Using another targeted sensor, we measured basal ciliary cAMP that is fivefold higher than whole-cell cAMP. The elevated basal ciliary cAMP level is a result of adenylyl cyclase 5 and 6 activity that depends on ciliary phosphatidylinositol (3,4,5)-trisphosphate (PIP₃), not stimulatory G protein (Gα_s), signaling. Sonic Hedgehog (SHH) reduces ciliary cAMP levels, inhibits ciliary PKA activity, and increases Gli1. Remarkably, SHH regulation of ciliary cAMP and downstream signals is not dependent on inhibitory G protein (Gα_i/o) signaling but rather Ca²⁺ entry through a Gd³⁺-sensitive channel. Therefore, PIP₃ sustains high basal cAMP that maintains PKA activity in cilia and Gli repression. SHH activates Gli by inhibiting cAMP through a G protein-independent mechanism that requires extracellular Ca²⁺ entry.