Canonical Hedgehog (HH) signaling is characterized by Smoothened (Smo)-dependent activation of the transcription factors Gli1 and Gli2, which regulate HH target genes. In human colon carcinoma cells, treatment with the Gli small-molecule inhibitor GANT61 induces extensive cell death in contrast to the Smo inhibitor cyclopamine. Here we elucidate cellular events upstream of cell death elicited by GANT61, which reveal the basis for its unique cytotoxic activity in colon carcinoma cells. Unlike cyclopamine, GANT61 induced transient cellular accumulation at G(1)-S (24 hours) and in early S-phase (32 hours), with elevated p21(Cip1), cyclin E, and cyclin A in HT29 cells. GANT61 induced DNA damage within 24 hours, with the appearance of p-ATM and p-Chk2. Pharmacologic inhibition of Gli1 and Gli2 by GANT61 or genetic inhibition by transient transfection of the Gli3 repressor (Gli3R) downregulated Gli1 and Gli2 expression and induced γH2AX, PARP cleavage, caspase-3 activation, and cell death. GANT61 induced γH2AX nuclear foci, while transient transfection of Gli3R showed expression of Gli3R and γH2AX foci within the same nuclei in HT29, SW480, and HCT116. GANT61 specifically targeted Gli1 and Gli2 substantiated by specific inhibition of (i) direct binding of Gli1 and Gli2 to the promoters of target genes HIP1 and BCL-2, (ii) Gli-luciferase activity, and (iii) transcriptional activation of BCL-2. Taken together, these findings establish that inhibition of HH signaling at the level of the GLI genes downstream of Smo is critical in the induction of DNA damage in early S-phase, leading to cell death in human colon carcinoma cells. ©2011 AACR.