Aberrant activation of Hedgehog (Hh) signalling has been implicated in the pathogenesis of human cancers. However, the cognate molecular mechanisms contributing to this disregulated pathway are incompletely understood. In this study, we showed that Zic2 was frequently over-expressed and associated with high-grade cervical cancer (p = 0.032), high levels of Gli1 (p < 0.001) and CyclinD1 (p < 0.001) by immunohistochemical and quantitative RT-PCR analyses. Further biochemical studies using luciferase reporter, co-immunoprecipitation, subcellular fractionation and immunofluorescence analyses demonstrated that Zic2 can physically interact with Gli1 and retain it in the nucleus, which in turn increases Gli-mediated transcriptional activity. Gain- and loss-of-function analyses of Zic2 showed that Zic2 could increase Hh signalling activity, cell proliferation and anchorage-independent growth ability in cervical cancer cells. Conversely, deletion of the zinc finger domain at C-terminus of Zic2 significantly abrogated its interaction with Gli1, the retention of Gli1 in the nucleus, effects on Hh signalling activity and oncogenic properties in cervical cancer cells. Our findings suggest that Zic2 is a positive modulator increasing Gli1 transcriptional and oncogenic activity by retaining Gli1 in the nucleus of cervical cancer cells.