Deciphering the BCR-ABL-independent signaling exploited in chronic myeloid leukemia (CML) progression is an important aspect in cancer stem-cell biology. CML stem-cell compartment is dynamic as it progresses to terminal blast crisis where myeloid and lymphoid blasts fail to differentiate. We demonstrate cross-regulation of signaling network involving Sonic hedgehog (Shh), Wnt, Notch and Hox for the inexorable blastic transformation of CD34(+) CML cells. Significant upregulation in Patched1, Frizzled2, Lef1, CyclinD1, p21 (P < or =0.0002) and downregulation of HoxA10 and HoxB4 (P< or =0.0001) transcripts in CD34(+) cells distinguish blast crisis from chronic CML. We report Shh-dependent Stat3 activation orchestrates these mutually interconnected signaling pathways. Stimulation of CD34(+) CML cells with either soluble Shh or Wnt3a did not activate Akt or p44/42-mitogen activated protein kinase (MAPK) pathways. Interestingly, unlike dominant negative Stat3beta, introduction of constitutive active Stat3 in CD34(+) CML cells induces cross-regulation in gene expression. Additionally, Shh and Wnt3a-dependent regulation of cyclin-dependent kinase inhibitors (CDKI) in CML suggests their role in the network. Taken together, our findings propose that deregulation in the form of hyperactive Shh and Wnt with repressed Notch and Hox pathways involving Stat3, Gli3, beta-catenin, CyclinD1, Hes1, HoxA10 and p21 might act synergistically to form an important hub in CML progression.