Hedgehog (Hh) is a core signaling pathway implicated in fundamental processes during embryonic kidney development. We previously found that loss-of-function mutations in the transcription factor GLIS2, a putative vertebrate ortholog of Drosophila Ci, cause nephronophthisis type 7 in humans and mice. Kidney tubular cells in Glis2-knockout mice acquire mesenchymal phenotype, but the cellular mechanisms of this transition are unknown. Here, we demonstrate that Glis2 is a functional component of Hh signaling and is necessary to suppress this pathway in the postnatal kidney. In the epithelial compartment, Glis2 opposes Gli1 activity by binding cis-acting regulatory sequences in the 5' flanking regions of Snai1 and Wnt4, thereby inhibiting de-differentiation of tubular cells. We conclude that Glis2 is necessary to inhibit Hh signaling and to maintain the mature tubular epithelial phenotype in the adult kidney. This is the first description of a molecular mechanism that links the Hh signaling pathway to cystic kidney diseases and can open new avenues for the treatment of diverse ciliopathies. © The Author 2011. Published by Oxford University Press. All rights reserved.