Gli (glioma-associated oncogene homologue) proteins act as terminal effectors of the Hedgehog signalling pathway, which is implicated in the development of many human malignancies. Gli activation is important for cell proliferation and anti-apoptosis in various cancers. Several studies have suggested that nuclear receptors have anti-cancer effects by inhibiting the activation of various oncoproteins. However, the involvement of nuclear receptors on the Hedgehog/Gli signalling pathway is poorly defined. In the present study we identified SHP (small heterodimer partner) as a nuclear receptor that decreased the expression of Gli target genes by repressing the transcriptional activity of Gli1. The inhibitory effect of SHP was associated with the inhibition of Gli1 nuclear localization via protein-protein interaction. Finally, SHP overexpression decreased the expression of Gli target genes and SHP knockdown increased the expression of these genes. Taken together, these results suggest that SHP can play a negative role in Hedgehog/Gli1 signalling.