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Cancer repeatedly exploits attributes fundamental for morphogenesis to advance malignancy and metastasis. This is illustrated by lineage-specific transcription factors that regulate neural crest migration, representing frequent drivers of malignancy. One such example is the forkhead transcription factor FOXC1, where gain of function is a feature of diverse cancers that is associated with an unfavorable prognosis. Using RNA-, ChIP-sequencing and CRISPR interference, we show that Foxc1 binds a locus in a region of closed chromatin to induce expression of Arhgap36, a tissue-specific inhibitor of protein kinase A. Because PKA is a core Hedgehog (Hh) pathway inhibitor, Foxc1's induction of Arhgap36 expression increases Hh activity. The function of Sufu, a PKA substrate, and a second essential Hh pathway inhibitor, is likewise impaired. The resulting increased Hh pathway output is resistant to pharmacological inhibition of Smoothened, a phenotype of more aggressive cancers. The Foxc1-Arhgap36 relationship identified in murine cells was further evaluated in neuroblastoma, a neural crest-derived pediatric malignancy. This demonstrated in a cohort of 1348 patients that high levels of ARHGAP36 are predictive of improved 5-year survival. Accordingly, this study has identified as a novel transcription factor which enhances ARHGAP36 expression, one that induces Hh activity in multiple tissues during development. It also establishes a model by which increased levels of FOXC1 via ARHGAP36 and PKA inhibition dysregulate multiple facets of Hh signaling and provides evidence demonstrating relevance to a common neural-crest-derived malignancy.