Pancreatic cancer, mostly pancreatic ductal adenocarcinomas (PDAC), is one of the most lethal cancers, with a dismal median survival around 8 months. PDAC is notoriously resistant to chemotherapy. Thus far, numerous attempts using novel targeted therapies and immunotherapies yielded limited clinical benefits for pancreatic cancer patients. It is hoped that delineating the molecular mechanisms underlying drug resistance in pancreatic cancer may provide novel therapeutic options. Using acquired gemcitabine resistant pancreatic cell lines, we revealed an important role of the GLI-SOX2 signaling axis for regulation of gemcitabine sensitivity in vitro and in animal models. Down-regulation of GLI transcriptional factors (GLI1 or GLI2), but not SMO signaling inhibition, reduces tumor sphere formation, a characteristics of tumor initiating cell (TIC). Down-regulation of GLI transcription factors also decreased expression of TIC marker CD24. Similarly, high SOX2 expression is associated with gemcitabine resistance whereas down-regulation of SOX2 sensitizes pancreatic cancer cells to gemcitabine treatment. We further revealed that elevated SOX2 expression is associated with an increase in GLI1 or GLI2 expression. Our ChIP assay revealed that GLI proteins are associated with a putative Gli binding site within the SOX2 promoter, suggesting a more direct regulation of SOX2 by GLI transcription factors. The relevance of our findings to human disease was revealed in human cancer specimens. We found that high SOX2 protein expression is associated with frequent tumor relapse and poor survival in stage II PDAC patients (all of them underwent gemcitabine treatment), indicating that reduced SOX2 expression or down-regulation of GLI transcription factors may be effective in sensitizing pancreatic cancer cells to gemcitabine treatment.