Aberrations in the Hedgehog (Hh) signaling pathway are significantly prevailed in various cancers, including B-cell lymphoma. A critical facet of Hh signal transduction involves the dynamic regulation of the suppressor of fused homolog (SUFU)-glioma-associated oncogene homolog (GLI) complex within the kinesin family member 7 (KIF7)-supported ciliary tip compartment. However, the specific post-translational modifications of SUFU-GLI complex within this context have remained largely unexplored. Our study reveals a novel regulatory mechanism involving prolyl 4-hydroxylase 2 (P4HA2), which forms a complex with KIF7 and is essential for signal transduction of Hh pathway. We demonstrate that, upon Hh pathway activation, P4HA2 relocates alongside KIF7 to the ciliary tip. Here, it hydroxylates SUFU to inhibit its function, thus amplifying the Hh signaling. Moreover, the absence of P4HA2 significantly impedes B lymphoma progression. This effect can be attributed to the suppression of Hh signaling in stromal fibroblasts, resulting in decreased growth factors essential for malignant proliferation of B lymphoma cells. Our findings highlight the role of P4HA2-mediated hydroxylation in modulating Hh signaling and propose a novel stromal-targeted therapeutic strategy for B-cell lymphoma.