Katanin is a microtubule-severing complex whose catalytic activities are well characterized, but whose in vivo functions are incompletely understood. Human mutations in KATNB1, which encodes the noncatalytic regulatory p80 subunit of katanin, cause severe microlissencephaly. Loss of Katnb1 in mice confirms essential roles in neurogenesis and cell survival, while loss of zebrafish katnb1 reveals specific roles for katnin p80 in early and late developmental stages. Surprisingly, Katnb1 null mutant mouse embryos display hallmarks of aberrant Sonic hedgehog signaling, including holoprosencephaly. KATNB1-deficient human cells show defective proliferation and spindle structure, while Katnb1 null fibroblasts also demonstrate a remarkable excess of centrioles, with supernumerary cilia but deficient Hedgehog signaling. Our results reveal unexpected functions for KATNB1 in regulating overall centriole, mother centriole, and cilia number, and as an essential gene for normal Hedgehog signaling during neocortical development.