Parathyroid hormone-related peptide (PTHrP) is a major factor involved in tumor-induced osteolysis caused by breast cancers that have metastasized to bone. However, the molecular mechanisms that mediate PTHrP production by breast cancer cells are not entirely clear. We hypothesized that Gli2, a downstream transcriptional effector of the Hedgehog (Hh) signaling pathway, regulates PTHrP expression in metastatic breast cancer because the Hh pathway regulates physiologic PTHrP expression in the developing growth plate. Here, we show that Gli2 is expressed in several human cancer cell lines that cause osteolytic lesions in vivo and produce PTHrP (MDA-MB-231, RWGT2, and PC-3) but is not expressed in nonosteolytic cancer cell lines that do not secrete PTHrP (MCF-7, ZR-75, and T47D). Transient expression of Gli2 in MDA-MB-231 and MCF-7 breast cancer cells increased PTHrP promoter-luciferase activity dose dependently. Stable expression of Gli2 in MDA-MB-231 cells resulted in an increase in PTHrP protein in the conditioned medium. Alternatively, MDA-MB-231 cells stably transfected with Gli2-EnR, a repressor of Gli2 activity, exhibited a 72% to 93% decrease in PTHrP mRNA by quantitative real-time PCR when compared with control cells. To examine the effects of Gli2 on breast cancer-mediated osteolysis in vivo, athymic nude mice were inoculated with MDA-MB-231 cells stably expressing Gli2 or the empty vector. Following tumor cell inoculation via the left cardiac ventricle, Gli2-expressing tumors caused significantly more osteolysis. Together, these data suggest that PTHrP expression and osteolysis in vivo in human breast cancer cells is driven at least in part by Gli2.