Gene expression profiling indicates that the Sonic Hedgehog (Shh) pathway is active in approximately 30% of human medulloblastomas, suggesting that it could provide a useful therapeutic target. Previously, we showed that spontaneous medulloblastomas in Ptc1(+/-)p53-/- mice could be eradicated by treatment with a small-molecule inhibitor (HhAntag) of Smoothened (Smo). Here, we compared the responses of mouse medulloblastoma cells propagated in flank allografts, either directly or after culture in vitro, to HhAntag. We found that Shh pathway activity was suppressed in medulloblastoma cells cultured in vitro and it was not restored when these cells were transplanted into the flank of nude mice. The growth of these transplanted tumor cells was not inhibited by treatment of mice with doses of HhAntag that completely suppressed Smo activity. Interestingly, tumor cells transplanted directly into the flank maintained Smo activity and were sensitive to treatment with HhAntag. These findings indicate that propagation of tumor cells in culture inhibits Smo activity in a way that cannot be reversed by transplantation in vivo, and they raise concerns about the use of cultured tumor cells to test the efficacy of Shh pathway inhibitors as anticancer therapies.