The mechanism of Sonic Hedgehog (Shh) pathway activation in non-small cell lung cancer (NSCLC) is poorly described. Using an antibody against the Shh C-terminal domain, we found a small population of Shh-positive (Shh+) cells in NSCLC cells. The objective of this study was to characterize these Shh+ cells. Shh+ and Shh- cells were sorted by using Fluorescence Activated Cell Sorting (FACS) on 12 commercial NSCLC cell lines. Functional analyses on sorted cells were performed with gene expression assays (qRT-PCR and microarray) and cells were treated with cytotoxic chemotherapy and a targeted inhibitor of Shh signaling (GDC0449). We used in vivo models of nude mice inoculated with Shh+ and Shh- sorted cells and drug-treated cells. Finally, we confirmed our results in fresh human NSCLC samples (n=48) paired with normal lung tissue. We found that Shh+ cells produced an uncleaved, full-length Shh protein detected on the membranes of these cells. Shh+ cells exerted a paracrine effect on Shh- cells, inducing their proliferation and migration. Shh+ cells were chemo-resistant and showed features of cancer stem cells (CSCs) in vitro and in vivo. Pharmacological inhibition of the Shh pathway suppressed their CSC features. A high percentage of Shh+ cells was associated with poor prognosis in early-stage NSCLC patients. In conclusion, we describe for the first time the presence of an abnormal membrane-bound full-length Shh protein in human cancer cells that allows the identification of CSCs in vitro and in vivo.