The primary cilium is emerging as a crucial regulator of signaling pathways central to vertebrate development and human disease. We identified atrioventricular canal 1 (avc1), a mouse mutation that caused VACTERL association with hydrocephalus, or VACTERL-H. We showed that avc1 is a hypomorphic mutation of intraflagellar transport protein 172 (Ift172), required for ciliogenesis and Hedgehog (Hh) signaling. Phenotypically, avc1 caused VACTERL-H but not abnormalities in left-right (L-R) axis formation. Avc1 resulted in structural cilia defects, including truncated cilia in vivo and in vitro. We observed a dose-dependent requirement for Ift172 in ciliogenesis using an allelic series generated with Ift172(avc1) and Ift172(wim), an Ift172 null allele: cilia were present on 42% of avc1 mouse embryonic fibroblast (MEF) and 28% of avc1/wim MEFs, in contrast to >90% of wild-type MEFs. Furthermore, quantitative cilium length analysis identified two specific cilium populations in mutant MEFS: a normal population with normal IFT and a truncated population, 50% of normal length, with disrupted IFT. Cells from wild-type embryos had predominantly full-length cilia, avc1 embryos, with Hh signaling abnormalities but not L-R abnormalities, had cilia equally divided between full-length and truncated, and avc1/wim embryos, with both Hh signaling and L-R abnormalities, were primarily truncated. Truncated Ift172 mutant cilia showed defects of the distal ciliary axoneme, including disrupted IFT88 localization and Hh-dependent Gli2 localization. We propose a model in which mutation of Ift172 results in a specific class of abnormal cilia, causing disrupted Hh signaling while maintaining L-R axis determination, and resulting in the VACTERL-H phenotype.