Hedgehog (Hh) signaling is a highly conserved intercellular and intracellular communication mechanism that governs organogenesis and is dysregulated in cancers of numerous tissues, including prostate. Up-regulated expression of the Hh ligands, Sonic (Shh) and Desert (Dhh), has been reported in androgen-deprived and castration-resistant prostate cancer (CRPC). In a cohort of therapy naive, short- and long-term neoadjuvant hormone therapy-treated (NHT), and CRPC specimens, we observed elevated Dhh expression predominantly in long-term NHT specimens and elevated Shh expression predominantly in CRPC specimens. Together with previously demonstrated reciprocal signaling between Shh-producing prostate cancer (PCa) cells and urogenital mesenchymal fibroblasts, these results suggest that castration-induced Hh expression promotes CRPC progression through reciprocal paracrine signaling within the tumor microenvironment. We tested whether the orally available Smoothened (Smo) antagonist, TAK-441, could impair castration-resistant progression of LNCaP PCa xenografts by disrupting paracrine Hh signaling. Although TAK-441 or cyclopamine did not affect androgen withdrawal-induced Shh up-regulation or viability of LNCaP cells, castration-resistant progression of LNCaP xenografts was significantly delayed in animals treated with TAK-441. In TAK-441-treated xenografts, expression of murine orthologs of the Hh-activated genes, Gli1, Gli2 and Ptch1, was substantially suppressed, while expression of the corresponding human orthologs was unaffected. As androgen-deprived LNCaP cells up-regulate Shh expression, but are not sensitive to Smo antagonists, these studies indicate that TAK-441 leads to delayed castration-resistant progression of LNCaP xenografts by disrupting paracrine Hh signaling with the tumor stroma. Thus, paracrine Hh signaling may offer unique opportunities for prognostic biomarker development, drug targeting and therapeutic response monitoring of PCa progression.