Aberrant expression of hedgehog molecules, particularly Gli1, is common in cancers of many tissues and is responsible for their aggressive behavior and chemoresistance. Here we demonstrate a novel and tumor-specific role for aberrant Gli1 in the regulation of the S-phase checkpoint that suppresses replication stress and resistance to chemotherapy. Inhibition of Gli1 in tumor cells induced replication stress-mediated DNA damage response, attenuated their clonogenic potential, abrogated camptothecin (CPT)-induced Chk1 phosphorylation, and potentiated its cytotoxicity. However, in normal fibroblasts, Gli1 siRNAs showed no significant changes in CPT-induced Chk1 phosphorylation. Further analysis of ataxia telangiectasia and Rad3-related protein (ATR)/Chk1 signaling cascade genes in tumor cells revealed an unexpected mechanism whereby Gli1 regulates ATR-mediated Chk1 phosphorylation by transcriptional regulation of the BH3-only protein Bid. Consistent with its role in DNA damage response, Bid down-regulation in tumor cells abolished CPT-induced Chk1 phosphorylation and sensitized them to CPT. Correspondingly, Gli1 inhibition affected the expression of Bid and the association of replication protein A (RPA) with the ATR- interacting protein (ATRIP)-ATR complex, and this compromised the S-phase checkpoint. Conversely, complementation of Bid in Gli1-deficient cells restored CPT-induced Chk1 phosphorylation. An in silico analysis of the Bid promoter identified a putative Gli1 binding site, and further studies using luciferase reporter assays confirmed Gli1-dependent promoter activity. Collectively, our studies established a novel connection between aberrant Gli1 and Bid in the survival of tumor cells and their response to chemotherapy, at least in part, by regulating the S-phase checkpoint. Importantly, our data suggest a novel drug combination of Gli1 and Top1 inhibitors as an effective therapeutic strategy in treating tumors that expresses Gli1.