Abstract Purpose: Distinct molecular subgroups of medulloblastoma, including hedgehog (Hh) pathway–activated disease, have been reported. We identified and clinically validated a five-gene Hh signature assay that can be used to preselect patients with Hh pathway–activated medulloblastoma. Experimental Design: Gene characteristics of the Hh medulloblastoma subgroup were identified through published bioinformatic analyses. Thirty-two genes shown to be differentially expressed in fresh-frozen and formalin-fixed paraffin-embedded tumor samples and reproducibly analyzed by RT-PCR were measured in matched samples. These data formed the basis for building a multi-gene logistic regression model derived through elastic net methods from which the five-gene Hh signature emerged after multiple iterations. On the basis of signature gene expression levels, the model computed a propensity score to determine Hh activation using a threshold set a priori. The association between Hh activation status and tumor response to the Hh pathway inhibitor sonidegib (LDE225) was analyzed. Results: Five differentially expressed genes in medulloblastoma (GLI1, SPHK1, SHROOM2, PDLIM3, and OTX2) were found to associate with Hh pathway activation status. In an independent validation study, Hh activation status of 25 medulloblastoma samples showed 100% concordance between the five-gene signature and Affymetrix profiling. Further, in medulloblastoma samples from 50 patients treated with sonidegib, all 6 patients who responded were found to have Hh-activated tumors. Three patients with Hh-activated tumors had stable or progressive disease. No patients with Hh-nonactivated tumors responded. Conclusions: This five-gene Hh signature can robustly identify Hh-activated medulloblastoma and may be used to preselect patients who might benefit from sonidegib treatment. Clin Cancer Res; 21(3); 585–93. ©2014 AACR.