They were indeed. Klara Pölzl, Alois Hitler's third wife, was also his half-niece.

This is what Wikipedia has to say about it: Adolf Hitler was born in Braunau am Inn, Austria, the fourth child of six. His father, Alois Hitler, (1837–1903), was a customs official. His mother, Klara Pölzl, (1860–1907), was Alois' third wife. She was also his half-niece, so a papal dispensation had to be obtained for the marriage. Of Alois and Klara's six children, only Adolf and his sister Paula reached adulthood. Hitler's father also had a son, Alois Jr, and a daughter, Angela, by his second wife. I saw another source that said he was their third child, so take some of the info at your own risk.

Yes they were most certainly related. Am taking WWII & Holocaust class & at university library I viewed a signed & dated request sent to the Bishop of Linz. The Bishop, being a very wise man, refused the dispensation for Alois & Klara to marry. They were related on both sides of their family tree. One branch of the tree was a second degree relation and the other branch was a third degree relation. Alois & Klara sent a request to the Vatican for a Papal dispensation to marry. The Pope granted permission & in my cynical view Herr Hiedler(the original spelling of Hitler) probably made a donation to the Vatican along with his request for dispensation to marry Klara. Adolph was the youngest of six children, Alois had 2 with his previous wife but only Adolph & his sister Paula lived beyond childhood. Paula had little contact with Der Fuhrer & lived under a pseudonym after Adolph's suicide but Paula is the only family member to have the name Hitler on her tombstone. Basically Adolph Hitler is the product of inbreeding and a fine example of what happens when cousins marry cousins. Although he was a notorious hypochondriac and drug abuser maybe some of his physical ailments stemmed from the inbreeding issue.