Cyclic AMP synergizes strongly with glucocorticoids (GC) to induce apoptosis in normal or malignant lymphoid cells. We examined the individual roles that cAMP-dependent protein kinase (PKA) and Epac (exchange protein directly activated by cAMP), two intracellular cAMP receptors, play in this synergistic effect. Our studies demonstrate that PKA is responsible for the observed synergism with GC, whereas Epac exerts a weak antagonistic effect against GC-induced apoptosis. We find that endogenous PKA activity is higher in the GC-sensitive clone than in the GC-resistant clone. In the GC-sensitive clone, higher PKA activity is associated with lower Hedgehog (Hh) activity. Moreover, inhibition of Hh activity by Hh pathway-specific inhibitors leads to cell cycle arrest and apoptosis in CEM (human acute lymphoblastic leukemia, T lineage) cells, and the GC-sensitive clone is more sensitive to Hh inhibition. These results suggest that Hh activity is critical for leukemia cell growth and survival and that the level of Hh activity is in part responsible for the synergism between cAMP and GC.