Sonic Hedgehog (SHH) signaling at primary cilia drives the proliferation and progression of a subset of medulloblastomas, the most common malignant paediatric brain tumor. Severe side effects associated with conventional treatments and resistance to targeted therapies has led to the need for new strategies. SHH signaling is dependent on primary cilia for signal transduction suggesting the potential for cilia destabilizing mechanisms as a therapeutic target. INPP5E is an inositol polyphosphate 5-phosphatase that hydrolyses PtdIns(4,5)P2 and more potently, the phosphoinositide (PI) 3-kinase product PtdIns(3,4,5)P3. INPP5E promotes SHH signaling during embryonic development via PtdIns(4,5)P2 hydrolysis at cilia, that in turn regulates the cilia recruitment of the SHH suppressor GPR161. However, the role INPP5E plays in cancer is unknown and the contribution of PI3-kinase signaling to cilia function is little characterized. Here, we reveal INPP5E promotes SHH signaling in SHH medulloblastoma by negatively regulating a cilia-compartmentalized PI3-kinase signaling axis that maintains primary cilia on tumor cells. Conditional deletion of Inpp5e in a murine model of constitutively active Smoothened-driven medulloblastoma slowed tumor progression, suppressed cell proliferation, reduced SHH signaling and promoted tumor cell cilia loss. PtdIns(3,4,5)P3, its effector pAKT and the target pGSK3β, which when non-phosphorylated promotes cilia assembly/stability, localized to tumor cell cilia. The number of PtdIns(3,4,5)P3/pAKT/pGSK3β-positive cilia was increased in cultured Inpp5e-null tumor cells relative to controls. PI3-kinase inhibition or expression of wild-type, but not catalytically inactive HA-INPP5E partially rescued cilia loss in Inpp5e-null tumor cells in vitro. INPP5E mRNA and copy number were reduced in human SHH medulloblastoma compared to other molecular subtypes and consistent with the murine model, reduced INPP5E was associated with improved overall survival. Therefore our study identifies a compartmentalized PtdIns(3,4,5)P3/AKT/GSK3β signaling axis at cilia in SHH-dependent medulloblastoma that is regulated by INPP5E to maintain tumor cell cilia, promote SHH signaling and thereby medulloblastoma progression.