The desert hedgehog (Dhh) is crucial for spermatogenesis and Leydig cell differentiation, but little is known regarding its physiological function in cartilage. In this study, Dhh mRNA was abundant in antler chondrocytes, where it advanced cell proliferation concomitant with accelerated transition from the G1 to the S phase and induced elevation of the hypertrophic chondrocyte markers, Col X and Runx2. Silencing of Ptch1 resulted in appreciable Smo accumulation and enhanced rDhh stimulation of Smo, whose impediment by cyclopamine obscured the proliferative function of Dhh and alleviated its guidance of chondrocyte differentiation. Further analysis evidenced the noteworthy positive action of Smo in the bridging between Dhh and Gli transcription factors. Obstruction of Gli1 by GANT58 caused the failed stimulation of Col X and Runx2 by rDhh. Analogously, siRNA against Gli1‐3 hindered chondrocyte differentiation in the context of rDhh. Simultaneously, Gli transcription factors mediated the regulation of Dhh on Foxa1, Foxa2, and Foxa3, whose knockdown impaired chondrocyte differentiation. Attenuation of Foxa antagonized the augmentation of Col X and Runx2 generated by rDhh. Collectively, Dhh signaling through its target Foxa appears to induce antler chondrocyte proliferation and differentiation. Desert hedgehog (Dhh) might induce the differentiation of antler chondrocytes through Smo. Inactivation of Ptch1 enhanced the induction of Dhh on Smo and facilitated the activation of Gli transcription factors to modulate Foxa expression.