Skeletal myogenesis serves as a paradigm to investigate the molecular mechanisms underlying exquisitely regulated cell fate decisions in developing embryos. The evolutionarily conserved miR-133 family of microRNAs is expressed in the myogenic lineage, but how it acts remains incompletely understood. Here, we performed genome-wide differential transcriptomics of miR-133 knockdown (KD) embryonic somites, the source of vertebrate skeletal muscle. These analyses, performed in chick embryos, revealed extensive downregulation of Sonic hedgehog (Shh) pathway components: patched receptors, Hedgehog interacting protein and the transcriptional activator Gli1. By contrast, Gli3, a transcriptional repressor, was de-repressed and confirmed as a direct miR-133 target. Phenotypically, miR-133 KD impaired myotome formation and growth by disrupting proliferation, extracellular matrix deposition and epithelialization. Together, these observations suggest that miR-133-mediated Gli3 silencing is crucial for embryonic myogenesis. Consistent with this idea, we found that activation of Shh signalling by either purmorphamine, or KD of Gli3 by antisense morpholino, rescued the miR-133 KD phenotype. Thus, we identify a novel Shh/myogenic regulatory factor/miR-133/Gli3 axis that connects epithelial morphogenesis with myogenic fate specification.