Gli transcription factors are central effectors of Hedgehog signaling in development and tumorigenesis. Using a tandem affinity purification (TAP) strategy and mass spectrometry, we have found that Gli1 interacts with 14-3-3epsilon, and that Gli2 and Gli3 also bind to 14-3-3epsilon through homologous sites. This interaction depends on their phosphorylation, and cAMP-dependent protein kinase (PKA), a known negative regulator of Hedgehog signaling serves as a responsible kinase. A Gli2 mutant engineered to eliminate this interaction exhibited increased transcriptional activity (2 approximately 3x). Transcriptional repression by 14-3-3 binding was also observed with Gli3, when its N-terminal repressor domain was deleted. The phosphorylation sites responsible for the binding to 14-3-3 are distinct from those required for proteolysis, the known mechanism for PKA-induced repression of Hh signaling. Our data propose a novel mechanism in which PKA down-regulates Hedgehog signaling by promoting the interaction between Gli and 14-3-3 as well as proteolysis. Given the certain neuronal or malignant disorders in human caused by the abnormality of 17p13 encompassing 14-3-3epsilon overlap with increased Hh signaling, the Gli-14-3-3 interaction may have pathological significance for those human diseases.