Prostate adenocarcinoma (CaP) patients are classified into low-, intermediate-, and high-risk groups that reflect relative survival categories. While there are accepted treatment regimens for low- and high-risk patients, intermediate-risk patients pose a clinical dilemma, as treatment outcomes are highly variable for these individuals. A better understanding of the factors that regulate the progression of CaP is required to delineate risk. For example, aberrant activation of the Hedgehog (Hh) pathway is implicated in CaP progression. Here, we identify the serine protease inhibitor protease nexin 1 (PN1) as a negative regulator of Hh signaling in prostate. Using human CaP cell lines and a mouse xenograft model of CaP, we demonstrate that PN1 regulates Hh signaling by decreasing protein levels of the Hh ligand Sonic (SHH) and its downstream effectors. Furthermore, we show that SHH expression enhanced tumor growth while overexpression of PN1 inhibited tumor growth and angiogenesis in mice. Finally, using comparative genome hybridization, we found that genetic alterations in Hh pathway genes correlated with worse clinical outcomes in intermediate-risk CaP patients, indicating the importance of this pathway in CaP.