Resistance of Bcr-Abl-positive leukemic stem cells (LSCs) to imatinib treatment in patients with chronic myeloid leukemia (CML) can cause relapse of disease and might be the origin for emerging drug-resistant clones. In this study, we identified Smo as a drug target in Bcr-Abl-positive LSCs. We show that Hedgehog signaling is activated in LSCs through upregulation of Smo. While Smo^−/− does not impact long-term reconstitution of regular hematopoiesis, the development of retransplantable Bcr-Abl-positive leukemias was abolished in the absence of Smo expression. Pharmacological Smo inhibition reduced LSCs in vivo and enhanced time to relapse after end of treatment. Our results indicate that Smo inhibition might be an effective treatment strategy to reduce the LSC pool in CML.