AbstractA role for Hedgehog (Hh) signalling in the development of colorectal cancer (CRC) has been proposed. In CRC and other solid tumours, Hh ligands are upregulated; however, a specific Hh antagonist provided no benefit in a clinical trial. Here we use Hh reporter mice to show that downstream Hh activity is unexpectedly diminished in a mouse model of colitis-associated colon cancer, and that downstream Hh signalling is restricted to the stroma. Functionally, stroma-specific Hh activation in mice markedly reduces the tumour load and blocks progression of advanced neoplasms, partly via the modulation of BMP signalling and restriction of the colonic stem cell signature. By contrast, attenuated Hh signalling accelerates colonic tumourigenesis. In human CRC, downstream Hh activity is similarly reduced and canonical Hh signalling remains predominantly paracrine. Our results suggest that diminished downstream Hh signalling enhances CRC development, and that stromal Hh activation can act as a colonic tumour suppressor.