The hedgehog (Hh) signaling pathway is essential for embryonic development and carcinogenesis. Activation of Hh signaling has been identified in several types of gastrointestinal cancers, including esophageal, gastric, pancreatic, and liver cancers. Several recent studies suggest that Hh signaling activation can inhibit Wnt signaling. However, the molecular basis underlying this inhibition remains unclear. As transcription factors in the Hh signaling pathway, Gli molecules transform cells in culture, and their expression are associated with cancer development. Here we report that expression of a secreted frizzled-related protein-sFRP-1 in mouse embryonic fibroblasts is dependent on Gli1 and Gli2. In human gastric cancer cells, inhibition of Hh signaling reduces the level of sFRP-1 transcript, whereas ectopic expression of Gli1 increases the level of sFRP-1 transcript. Results from chromatin immunoprecipitation indicate that Gli1 is involved in transcriptional regulation of sFRP-1. In 293 cells with Gli1 expression, Wnt-1-mediated beta-catenin accumulation in the cytosol and DKK1 expression are all abrogated, which can be reversed by inhibiting sFRP-1 expression. Furthermore, while SIIA cells do not respond to Wnt-1-conditioned medium, inhibition of Hh signaling by smoothened (SMO) antagonist KAAD-cyclopamine (keto-N-aminoethylaminocaproyldihydrocinnamoylcyclopamine) leads to Wnt1-mediated beta-catenin accumulation in the cytosol. These data indicate that sFRP-1, a target gene of the hedgehog pathway, is involved in cross-talk between the hedgehog pathway and the Wnt pathway.