Aberrant activation of the Hedgehog (Hh) signaling pathway has been reported in various cancer types including prostate cancer. The GLI2 transcription factor is a primary mediator of Hh signaling. However, its relative contribution to development of prostate tumors is poorly understood. To establish the role of GLI2 in maintaining the tumorigenic properties of prostate cancer cells, we developed GLI2-specific small hairpin RNA. Knockdown of GLI2 in these cells resulted in significant down-regulation of the Hh signaling pathway, followed by inhibition of colony formation, anchorage-independent growth, and growth of xenografts in vivo. Conversely, ectopic expression of Gli2 in nontumorigenic prostate epithelial cells resulted in accelerated cell cycle progression, especially transition through G(2)-M, and augmented proliferation. Altogether, our findings suggest that GLI2 plays a critical role in the malignant phenotype of prostate cancer cells, and GLI2 may potentially become an attractive therapeutic target for the treatment of prostate cancer.