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Colorectal cancer is a leading cause of cancer-related mortality worldwide, with Fluorouracil (5-FU)-based chemotherapy as the major treatment for advanced disease. Many patients with advanced colorectal cancer eventually succumb to the disease despite some patients responded initially to chemotherapy. Thus, identifying molecular mechanisms responsible for chemotherapy resistance will help design novel strategies to treat colorectal cancer. In this study, we established an acquired 5-FU resistant cell line, LoVo-R, from LoVo cells. Through exome sequencing, we discovered that elevated GLI1 signaling axis is a major genetic alteration in the 5-FU resistant cells. Hh signaling, a pathway essential for embryonic development, is an important regulator for residual cancer cells. We demonstrated that knockdown of GLI1 or GLI2 sensitized LoVo-R cells to 5-FU treatment, reduced cell invasiveness. The relevance of our studies to colorectal cancer patients is reflected by our discovery that high expression of GLI1 signaling molecules was associated with a high incidence of cancer relapse and a shorter survival in a larger cohort of colorectal cancer patients who underwent chemotherapy (containing 5-FU). Taken together, our data demonstrate the critical role of the GLI1 signaling axis for 5-FU resistance in colorectal cancer. Electronic supplementary material The online version of this article (doi:10.1186/s13578-017-0145-7) contains supplementary material, which is available to authorized users.