The PTCH1 tumor suppressor gene encodes a receptor for secreted hedgehog (HH) ligands and is important for proper proliferation, differentiation and patterning in almost every tissue and organ during embryogenesis. The PTCH1 protein works as a negative regulator of the HH-signaling pathway by repressing downstream signaling by the coreceptor smoothened (SMOH). Mutations in PTCH1 lead to constitutive expression of HH target genes and a relationship between mutated PTCH1 and the most common tumor form in the Western world, Basal Cell Carcinoma (BCC) has been clearly established. We here show that PTCH1 is transcriptionally regulated by three independent promoters generating transcripts with alternative first exons. We demonstrate that only one of two putative Gli-binding sites that were identified in the promoter region of PTCH1 is functional, and that the transactivating Gli proteins, GLI1, Gli2 and GLI3, bind and enhance transcription through this site. Moreover, a strong repression of both basal and induced PTCH1 transcription was observed following expression of a truncated version of GLI3. Most interestingly, the upstream components in the HH-signaling cascade, Sonic HH (SHH) and SMOH, solely operate through the functional Gli-binding site because mutation of the Gli-binding site resulted in the disappearance of the enhanced transcription induced by the Gli proteins, as well as by SHH or SMOH. This finding suggests that transcriptional activation of the PTCH1 gene mediated via the HH-signaling pathway is dependent on the single functional Gli-binding site.