Holoprosencephaly (HPE) is a commonly occurring developmental defect in which midline patterning of the forebrain and midface is disrupted. Sonic hedgehog (SHH) signaling is required during multiple stages of rostroventral midline development, and heterozygous mutations in SHH pathway components are associated with HPE. However, clinical presentation of HPE is highly variable, and carriers of heterozygous mutations often lack apparent defects. It is therefore thought that such mutations must interact with more common modifiers, genetic and/or environmental. We have modeled this scenario in mice. Cdon mutant mice have a largely subthreshold defect in SHH signaling, rendering them sensitive to a wide spectrum of HPE phenotypes by additional hits that are themselves insufficient to produce HPE, including transient in utero exposure to ethanol. These variable HPE phenotypes may arise in embryos that fail to reach a threshold level of SHH signaling at a specific developmental stage. To provide evidence for this possibility, here we tested the effect of removing one copy of the negative regulator Ptch1 from Cdon(-/-) embryos and compared their response to ethanol with that of Cdon(-/-);Ptch1(+/+) embryos. Ptch1 heterozygosity decreased the penetrance of HPE in this system by >75%. The major effect of reduced Ptch1 gene dosage was on penetrance, as those Cdon(-/-);Ptch1(+/-) embryos that displayed HPE did not show major differences in phenotype from Cdon(-/-);Ptch1(+/+) embryos with ethanol-induced HPE. Our findings are consistent with the notion that even in an etiologically complex model of HPE, the level of SHH pathway activity is rate-limiting. Furthermore, the clinical outcome of an individual carrying a SHH pathway mutation will likely reflect the sum effect of both deleterious and protective modifier alleles and their interaction with non-genetic risk factors like fetal alcohol exposure.