Sustained Hedgehog (HH) signaling is implicated in basal cell carcinoma of the skin and other types of cancer. Here we show that GLI1 and GLI2, the main transcriptional activators of the HH pathway, directly regulate expression of the activator protein 1 (AP-1) family member JUN, a transcription factor controlling keratinocyte proliferation and skin homeostasis. Activation of the JUN promoter by GLI is dependent on a GLI-binding site and the AP-1 sites known to be involved in self-activation of JUN. Transcription of JUN is greatly enhanced in the presence of GLI and requires activated JUN protein. GLI2act is a more potent activator than GLI1 in these experiments and physical interaction with phosphorylated JUN was only detected for GLI2act. The synergistic effect of GLI and JUN extends to the activation of further GLI target genes as shown by shRNA-mediated knockdown of JUN in human keratinocytes. Some of these cooperatively activated genes are involved in cell-cycle progression, which is consistent with a significant reduction of the proliferative potential of GLI in the absence of JUN. These results suggest a novel connection between HH/GLI pathway activity and JUN, which may contribute to the oncogenic activity of HH/GLI signaling in skin.