The developmentally important Hedgehog (Hh) signaling pathway has recently been implicated in several forms of solid cancer. Current drug development programs focus on targeting the protooncogene Smoothened, a key transmembrane pathway member. These drug candidates, albeit promising, do not address the scenario in which pathway activation occurs downstream of Smoothened, as observed in cases of medulloblastoma, glioma, pericytoma, breast cancer, and prostate cancer. A cellular screen for small-molecule antagonists of GLI-mediated transcription, which constitutes the final step in the Hh pathway, revealed two molecules that are able to selectively inhibit GLI-mediated gene transactivation. We provide genetic evidence of downstream pathway blockade by these compounds and demonstrate the ineffectiveness of upstream antagonists such as cyclopamine in such situations. Mechanistically, both inhibitors act in the nucleus to block GLI function, and one of them interferes with GLI1 DNA binding in living cells. Importantly, the discovered compounds efficiently inhibited in vitro tumor cell proliferation in a GLI-dependent manner and successfully blocked cell growth in an in vivo xenograft model using human prostate cancer cells harboring downstream activation of the Hh pathway.