Although considerable evidence suggests that in utero arsenic exposure affects children's health, these data are mainly from areas of the world where groundwater arsenic levels far exceed the World Health Organization limit of 10 μg/L. We, and others, have found that more common levels of in utero arsenic exposure may also impact children's health. However, the underlying molecular mechanisms are poorly understood. To address this issue, we analyzed the expression of key developmental genes in fetal placenta in a birth cohort of women using unregulated water supplies in a US region with elevated groundwater arsenic. We identified several genes whose expression associated with maternal arsenic exposure in a fetal sex-specific manner. In particular, expression of the HEDGEHOG pathway component, GLI3, in female placentae was both negatively associated with arsenic exposure and positively associated with infant birth weight. This suggests that modulation of GLI3 in the fetal placenta, and perhaps in other fetal tissues, contributes to arsenic's detrimental effects on fetal growth. We showed previously that arsenic-exposed NIH3T3 cells have reduced GLI3 repressor protein. Together, these studies identify GLI3 as a key signaling node that is affected by arsenic, mediating a subset of its effects on developmental signaling and fetal health.