The Hedgehog (Hh) signalling cascade is conserved across evolution and plays an important role in development and disease. In the absence of Hh, activity of the key signal transducer Smoothened (Smo) is downregulated by the Hh receptor Patched (Ptc). However, the mechanisms underlying this inhibition, and especially its release upon ligand stimulation, are still poorly understood, in part because tools for directly following Smo activation at the subcellular level were long lacking. Here we present a high throughput, cell culture assay based on a fluorescent sensor for Drosophila Smo phosphorlyation. Using this approach we could first demonstrate that the graded response to increasing Hh levels observed at the population level can be traced back to threshold responses of individual cells exhibiting differential Hh sensitivity. Second, we screened a small molecule inhibitor library for regulators of Smo phosphorylation. We observed increased Smo sensor fluorescence with compounds aimed at two major target groups, the MAPK signalling cascade and polo and aurora kinases. Biochemical validation confirmed the screen results for selected inhibitors (dobrafenib, tak-733, volasertib) and revealed differences in the mode of Smo activation, demonstrating that the assay is in principle suitable for dissecting the cell biological basis of Hh pathway activation.