Gli signaling is critical for central nervous system development and is implicated in tumorigenesis. To monitor Gli signaling in gliomas in vivo, we created platelet-derived growth factor–induced gliomas in a Gli-luciferase reporter mouse. We find that Gli activation is found in gliomas and correlates with grade. In addition, we find that sonic hedgehog (SHH) is expressed in these tumors and also correlates with grade. We identify microvascular proliferation and pseudopalisades, elements that define high-grade gliomas as SHH-producing microenvironments. We describe two populations of SHH-producing stromal cells that reside in perivascular niche (PVN), namely low-cycling astrocytes and endothelial cells. Using the Ptc-LacZ knock-in mouse as a second Gli responsive reporter, we show β-galactosidase activity in the PVN and in some tumors diffusely throughout the tumor. Lastly, we observe that SHH is similarly expressed in human gliomas and note that an intact tumor microenvironment or neurosphere conditions in vitro are required for Gli activity. [Cancer Res 2008;68(7):2241–49]