Hedgehog (HH) signaling is one of the key pathways with major significance for embryogenesis, tumorigenesis, and stem cell maintenance. Glioma-associated oncogene 1 (GLI1) is a transcription factor that acts as the terminal signaling effector but also represents a pathway target gene. Here we report the identification and functional properties of novel GLI1 splice variants generated by skipping exons 2 and 3 and encoding an N-terminal truncated GLI1 protein (GLI1⌬N). Analysis of the GLI1⌬N mRNAs in adult human tissues revealed comparable expression levels to the full-length GLI1 (GLI1FL), whereas in tumor cell lines a generally lower and more variable expression pattern was observed. Furthermore, GLI1⌬N is up-regulated by HH signaling to the same extent as GLI1FL but has a weaker capacity to activate transcription. However, in specific cellular contexts GLI1⌬N may be more potent than GLI1FL in activating endogenous gene expression. Moreover, the dual-specificity tyrosine phosphorylation-regulated kinase 1 (Dyrk1) potentiates the transcriptional activity of GLI1FL but not GLI1⌬N. Interestingly, GLI1FL, in contrast to GLI1⌬N, is localized solely at the nucleus, in line with its increased transcriptional capacity. The negative regulator of the pathway, Suppressor of Fused (SUFU), elicits a cytoplasmic retention of the GLI1 isoforms, which is more pronounced for GLI1FL, as this contains an N-terminal SUFU binding domain. Collectively, our findings reveal that the activation mechanism of the terminal transducer of the pathway, GLI1, is mediated not only by GLI1FL but also by the GLI1⌬N variant.The post-transcriptional process of alternative splicing is considered to be a pervasive phenomenon in eukaryotic gene expression that increases the diversity of mRNAs and proteins. Genome-wide analysis indicates that at least 75% of human multiexon genes have alternative splice variants (1, 2). Additionally, variations in the splicing pattern of gene products have been related to pathological states including cancer. It is now believed that a minimum of 15% of the point mutations responsible for human genetic diseases are in fact interfering with splicing regulatory events (3, 4). Alternative splice variants have the potential of being used as diagnostic markers and/or therapeutic targets (5).The Hedgehog (HH) 4 signaling pathway was first reported as a major pathway involved in pattern formation during development of Drosophila and embryonic developmental processes in vertebrates. Additionally, abnormal activation of the pathway has been linked to several cancers including basal cell carcinoma, medulloblastoma, rhabdomyosarcoma, lung, prostate, and pancreatic tumors (6 -9). Using Drosophila as the model organism significant findings on the mechanism of this pathway have been revealed. Active signal transduction is generally associated with binding of HH ligands to the Patched (PTCH) receptor. This releases the inhibitory effects of PTCH on the signaling molecule Smoothened (SMO), thus initiating a series of molecular events t...