Interaction of cancer cells with their microenvironment generated by stromal cells is essential for tumor cell survival and influences the localization of tumor growth. Here we demonstrate that hedgehog ligands secreted by bone-marrow, nodal and splenic stromal cells function as survival factors for malignant lymphoma and plasmacytoma cells derived from transgenic Emu-Myc mice or isolated from humans with these malignancies. Hedgehog pathway inhibition in lymphomas induced apoptosis through downregulation of Bcl2, but was independent of p53 or Bmi1 expression. Blockage of hedgehog signaling in vivo inhibited expansion of mouse lymphoma cells in a syngeneic mouse model and reduced tumor mass in mice with fully developed disease. Our data indicate that stromally induced hedgehog signaling may provide an important survival signal for B- and plasma-cell malignancies in vitro and in vivo. Disruption of this interaction by hedgehog pathway inhibition could provide a new strategy in lymphoma and multiple myeloma therapy.