The zinc finger transcription factor GLI1, which mediates Sonic hedgehog signaling during development, is expressed in several human cancers, including basal cell carcinoma, medulloblastoma, and sarcomas. We identified 147 genes whose levels of expression were significantly altered in RNA obtained from cells demonstrating a transformed phenotype with stable GLI1 expression or stable Ha-ras expression. Comparison of expression profiles from GLI1- and Ha-ras-expressing cells established a set of genes unique to GLI1-induced cell transformation. Thirty genes were altered by stable GLI1 expression, and 124 genes were changed by stable Ha-ras expression. Seven genes had altered expression levels in both GLI1- and Ha-ras-expressing cells. Genes whose expression was altered by GLI1 included cell cycle genes, cell adhesion genes, signal transduction genes, and genes regulating apoptosis. GLI1 consensus DNA-binding sequences were identified in the 5' regions of cyclin D2, IGFBP-6, osteopontin, and plakoglobin, suggesting that these genes represent immediate downstream targets. Gel shift analysis confirmed the ability of the GLI1 protein to bind these sequences. Up-regulation of cyclin D2 and down-regulation of plakoglobin were demonstrated in GLI1-amplified compared with non-amplified human rhabdomyosarcoma cells. Many of the GLI1 targets with known function identified in this study increase cell proliferation, indicating that GLI1-induced cell transformation occurs through multiple downstream pathways.