Recent evidence suggests a major role of tumor-stromal interactions in pancreatic cancer pathobiology. The chemokine CXCL12 (stromal cell-derived factor 1 (SDF-1)), abundantly produced by stromal cells, promotes progression, metastasis, and chemoresistance of pancreatic cancer cells. On the other hand, pancreatic tumor cell-derived sonic hedgehog (SHH) acts predominantly on stromal cells to induce desmoplasia and, thus, has a paracrine effect on tumorigenesis and therapeutic outcome. In this study, we examined the association between these two proteins of pathological significance in pancreatic cancer. Our data demonstrate that CXCL12 leads to a dose- and time-dependent up-regulation of SHH in pancreatic cancer cells. CXCL12-induced SHH up-regulation is specifically mediated through the receptor CXCR4 and is dependent on the activation of downstream Akt and ERK signaling pathways. Both Akt and ERK cooperatively promote nuclear accumulation of NF-κB by inducing the phosphorylation and destabilization of its inhibitory protein, IκB-α. Using dominant negative IκB-α, a SHH promoter (deletion mutant) reporter, and chromatin immunoprecipitation assays, we demonstrate that CXCL12 exposure enhances direct binding of NF-κB to the SHH promoter and that suppression of NF-κB activation abrogates CXCL12-induced SHH expression. Finally, our data demonstrate a strong correlative expression of CXCR4 and SHH in human pancreatic cancer tissues, whereas their expression is not observed in the normal pancreas. Altogether, our data reveal a novel mechanism underlying aberrant SHH expression in pancreatic cancer and identify a molecular link facilitating bidirectional tumor-stromal interactions.