Serine/threonine kinase Fused (Fu) is an essential component of Hedgehog (Hh) signaling in Drosophila, but the biochemical functions of Fu remain unclear. Here, we have investigated proteins co-precipitated with mammalian Fu and identified a kinase-specific chaperone complex, Cdc37/Hsp90, as a novel-binding partner of Fu. Inhibition of Hsp90 function by geldanamycin (GA) induces rapid degradation of Fu through a ubiquitin-proteasome pathway. We next show that co-expression of Fu with transcription factors Gli1 and Gli2 significantly increases their protein levels and luciferase reporter activities, which are blocked by GA. These increases can be ascribed to Fu-mediated stabilization of Gli because co-expression of Fu prolongs half-life of Gli1 and reduces polyubiquitination of Gli1. Finally, we show that GA inhibits proliferation of PC3, a Hh signaling-activated prostate cancer cell line. This growth inhibition is partially rescued by expression of ectopic Gli1, suggesting that Fu may contribute to enhance Hh signaling activity in cancer cells.