Desmoid tumor (also called aggressive fibromatosis) is a lesion of mesenchymal origin that can occur as a sporadic tumor or a manifestation of the preneoplastic syndrome, familial adenomatous polyposis caused by a mutation in adenomatous polyposis coli (APC). This tumor type is characterized by the stabilization of β-catenin and activation of Tcf-mediated transcription. Cell transplantation data suggest that desmoid tumors are derived from mesenchymal progenitor cells (MSCs). As such, modulating cell signaling pathways that regulate MSC differentiation or proliferation, such as hedgehog (Hh) signaling, could alter the tumor phenotype. Here, we found that Hh signaling is activated in human and murine desmoid tumors. Inhibiting Hh signaling in human cell cultures decreased cell proliferation and β-catenin protein levels. Apc(+)/Apc(1638N) mice, which develop desmoid tumors, develop smaller and fewer tumors when Hh signaling was inhibited either genetically (by crossing Apc(+)/Apc(1638N) mice with mice lacking one copy of a Hh-activated transcription factor, Gli2 (+/-) mice) or using a pharmacologic inhibitor. Both in mice and in human tumor cell cultures, β-catenin and Hh-mediated signaling positively regulate each other's activity. These data show that targeting a pathway that regulates MSC differentiation influences desmoid tumor behavior, providing functional evidence supporting the notion that these tumors are derived from mesenchymal progenitors. It also suggests Hh blockade as a therapeutic approach for this tumor type.