The poor clinical outcome of pancreatic cancer (PC) is largely attributed to its aggressive nature and refractoriness to currently available therapeutic modalities. We previously reported antitumor efficacy of honokiol (HNK), a phytochemical isolated from various parts of Magnolia plant, against PC cells in short-term in vitro growth assays. Here, we report that HNK reduces plating efficiency and anchorage-independent growth of PC cells and suppresses their migration and invasiveness. Furthermore, significant inhibition of pancreatic tumor growth by HNK is observed in orthotopic mouse model along with complete-blockage of distant metastases. Histological examination suggests reduced desmoplasia in tumors from HNK-treated mice, later confirmed by immunohistochemical analyses of myofibroblast and extracellular matrix marker proteins (α-SMA and collagen I, respectively). At the molecular level, HNK treatment leads to decreased expression of sonic hedgehog (SHH) and CXCR4, two established mediators of bidirectional tumor-stromal cross-talk, both in vitro and in vivo. We also show that the conditioned media (CM) from HNK-treated PC cells have little growth-inducing effect on pancreatic stellate cells (PSCs) that could be regained by the addition of exogenous recombinant SHH. Moreover, pretreatment of CM of vehicle-treated PC cells with SHH-neutralizing antibody abolishes their growth-inducing potential on PSCs. Likewise, HNK-treated PC cells respond poorly to CM from PSCs due to decreased CXCR4 expression. Lastly, we show that the transfection of PC cells with constitutively active IKKβ mutant reverses the suppressive effect of HNK on nuclear factor-kappaB activation and partially restores CXCR4 and SHH expression. Taken together, these findings suggest that HNK interferes with tumor-stromal cross-talk via downregulation of CXCR4 and SHH and decreases pancreatic tumor growth and metastasis.