The Hedgehog (Hh) pathway regulates cell differentiation and proliferation during development by controlling the Gli transcription factors. Cell fate decisions and progression toward organ and tissue maturity must be coordinated, and how an energy sensor regulates the Hh pathway is not clear. AMP-activated protein kinase (AMPK) is an important sensor of energy stores and controls protein synthesis and other energy-intensive processes. AMPK is directly responsive to intracellular AMP levels, inhibiting a wide range of cell activities if ATP is low and AMP is high. Thus, AMPK can affect development by influencing protein synthesis and other processes needed for growth and differentiation. Activation of AMPK reduces GLI1 protein levels and stability, thus blocking Sonic-hedgehog-induced transcriptional activity. AMPK phosphorylates GLI1 at serines 102 and 408 and threonine 1074. Mutation of these three sites into alanine prevents phosphorylation by AMPK. This leads to increased GLI1 protein stability, transcriptional activity, and oncogenic potency.