Aberrant Shh signaling promotes tumor growth in diverse cancers. The importance of Shh signaling is particularly evident in medulloblastoma and basal cell carcinoma (BCC), where inhibitors targeting the Shh pathway component Smoothened (Smo) show great therapeutic promise. However, the emergence of drug resistance limits long-term efficacy, and the mechanisms of resistance remain poorly understood. Using new medulloblastoma models, we identify two distinct paradigms of resistance to Smo inhibition. Sufu mutations lead to maintenance of the Shh pathway in the presence of Smo inhibitors. Alternatively activation of the RAS-MAPK pathway circumvents Shh pathway dependency, drives tumor growth, and enhances metastatic behavior. Strikingly, in BCC patients treated with Smo inhibitor, squamous cell cancers with RAS/MAPK activation emerged from the antecedent BCC tumors. Together, these findings reveal a critical role of the RAS-MAPK pathway in drug resistance and tumor evolution of Shh pathway-dependent tumors.