Activation of sonic hedgehog (HH) signaling pathway has been implicated in aggressiveness and progression of gastrointestinal tumors. We planned this study to identify a subgroup of gastric cancer (GC) patients with HH activation and to assess the effect of a HH inhibitor in HH activated GC in vitro. We surveyed HH pathway activation among 512 GC specimens for protein expression of various target genes involved in HH pathway: Indian hedgehog (IHH), patched-1 (PTCH1), smoothened (SMO), GLI2, and FOXA2. We analyzed the correlations between the expression of these factors and clinicopathological features and prognosis. In vitro, ten gastric cancer cell lines were screened for anti-tumoractivity of an HH inhibitor, GDC-0449. Among the 512 specimens, 105 (20.0 %), 83 (16.3 %), 130 (25.5 %), 61 (12.0 %), and 206 (40.8 %) were positive for IHH, PTCH1, GLI2, SMO, and FOXA2 expression, respectively. PTCH1 expression was more frequently observed in well- or moderately differentiated tubular adenocarcinoma, intestinal type and low stage GC. GLI2 was correlated with lymphovascular invasion and intestinal type GC. A high-stage and negative PTCH1 staining were identified as unfavorable independent risk factors for overall survival in multivariate analysis (P < 0.001, 0.045, respectively). For IHH, SMO, and FOXA2, there was no statistical difference in clinicopathologic variables and survival outcome. An HH inhibitor had particularly potent effects on GC cell lines with SMO mRNA overexpression. This is the largest report to analyze the hedgehog pathway in GC. PTCH1 overexpression was an independent prognostic factor for survival and SMO overexpression which was found in 12.0 % of GC patients might be the potential predictive marker of HH inhibitor.