Chronic Myeloid Leukemia (CML) is a hematopoietic stem cell malignancy that is driven by the oncogenic BCR-ABL fusion protein, and for which treatment with ABL tyrosine kinase inhibitors (TKI) has yielded great success. While this is the case, BCR-ABL leukemic stem cells can persist despite TKI therapy, and efforts have intensified towards determining the molecular pathways that are critical for the maintenance of such cells. Recent studies indicate that aberrant Hedgehog (Hh) signaling plays a crucial role in the survival of the leukemic stem cell population. The Hh pathway displays crucial roles during embryonic development, tissue regeneration and repair in adults. Several mechanisms that lead to the aberrant activation of the Hh pathway have been identified in various cancers. Here we review in detail the discovery that Hh signaling governs the maintenance of the critical leukemia initiating cells or leukemic stem cells (LSCs) in BCR-ABL-induced CML as well as discuss investigations on the role of Hh signaling in normal hematopoeisis. As inhibitors that directly target the positive Hh signal transducer Smoothened (SMO) have entered clinical trials, these findings offer a unique opportunity to potentially target the LSC population that is not eliminated with ABL tyrosine kinase inhibition therapy in CML.