Desert hedgehog (dhh) is a gene that is crucial for spermatogenesis and Leydig cell differentiation, but little is known regarding its influence on gonadal differentiation and development in fish. To understand its function, we cloned and characterized the dhh gene from Cynoglossus semilaevis (csdhh). The full length csdhh cDNA was 2473 bp, including a 1386 bp open reading frame (ORF), a 475 bp 5′-UTR, and a 612 bp 3′-UTR, encoding a predicted protein of 461 amino acid residues. Phylogenetic analysis showed that the putative protein belongs to the hedgehog (HH) family, and contains typical HH-N and HH-C domains. Amino acid sequence analysis revealed that CsDhh shares many features with Dhh analogues in other teleost species. Real-time quantitative PCR showed that csdhh was detected in eight different tissues in male and female tongue sole. During early embryonic development, the relative expression of the csdhh was significantly higher in the neural stage than in other embryonic developmental stages (P < 0.05). csdhh was detected at 20 days after hatching (dah) and at the critical period of male gonadal differentiation (80–95 dah), the relative expression of the csdhh was significantly higher in the male gonads than the female gonads. In 5, 8, and 12 month old gonads, the relative expression of the csdhh was significantly higher in male and pseudo-male than in female fish. The in situ hybridization (ISH) results showed that the hybridization signal was strongly expressed in primary and secondary spermatocytes, spermatids, and sertoli cells of the 1-year-old fish testis, with only weak signal expression in the corresponding ovarian tissue. These results suggest that csdhh is highly conserved in evolution and plays an important role in spermatogenesis in males and pseudo-males.