Sonic hedgehog pathway is highly activated in pancreatic cancer stem cells (CSC) which play crucial roles in cancer initiation, progression and metastasis. However, the molecular mechanisms by which sanguinarine regulates pancreatic CSC characteristics is not well understood. The objectives of this study were to examine the molecular mechanisms by which sanguinarine regulates pancreatic CSC characteristics. Sanguinarine inhibited cell proliferation and colony formation and induced apoptosis through oxidative damage. Sanguinarine inhibited self-renewal capacity of pancreatic CSCs isolated from human and KrasG12D mice. Furthermore, sanguinarine suppressed epithelial-mesenchymal transition (EMT) by up-regulating E-cadherin and inhibiting N-cadherin. Significant decrease in expression level of Snail, Slug and Zeb1 corroborated the suppression of EMT in sanguinarine treated pancreatic CSCS. The ability of sanguinarine to inhibit pluripotency maintaining factors and CSC markers suggest that sanguinarine can be an effective agent for inhibiting pancreatic cancer growth and development by targeting CSCs. Furthermore, sanguinarine inhibited Shh-Gli pathway leading to modulation of Gli target genes in pancreatic CSCs. Chromatin immunoprecipitation assay demonstrated that Nanog directly binds to promoters of Cdk2, Cdk6, FGF4, c-Myc and Oct4, and sanguinarine inhibits the binding of Nanog with these genes, suggesting the direct involvement of Nanog in cell cycle, pluripotency and self-renewal. To further investigate the role of Shh-Gli-Nanog pathway, we regulated Shh signaling either by Shh protein or Nanog overexpression. Enforced activation of Shh or overexpression of Nanog counteracted the inhibitory effects of sanguinarine on pancreatic CSC proliferation, suggesting the actions of sanguinarine are mediated, at least in part, through Shh-Gli-Nanog pathway. Our studies suggest that sanguinarine can be used for the treatment and/or prevention of pancreatic cancer by targeting CSCs.