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Dysregulation of Sonic hedgehog (Shh) signaling has been implicated in glioma pathogenesis. Yet, the role of this pathway in gliomagenesis remains controversial because of the lack of relevant animal models. Using the cytokeratin 5 promoter, we ectopically expressed a constitutively active zebrafish Smoothened (Smoa1) in neural progenitor cells and analyzed tumorigenic capacity of activated Shh signaling in both transient and stable transgenic fish. Transient transgenic fish overexpressing Smoa1 developed retinal and brain tumors, suggesting smoa1 is oncogenic in the zebrafish central nervous system (CNS). We further established stable transgenic lines that simultaneously developed optic pathway glioma (OPG) and various retinal tumors. In one of these lines, up to 80% of F1 and F2 fish developed tumors within 1 year of age. Microarray analysis of tumor samples showed upregulated expression of genes involved in the cell cycle, cancer signaling and Shh downstream targets ptc1, gli1 and gli2a. Tumors also exhibited specific gene signatures characteristic of radial glia and progenitor cells as transcriptions of radial glia genes cyp19a1b, s100β, blbp, gfap and the stem/progenitor genes nestin and sox2 were significantly upregulated. Overexpression of GFAP, S100β, BLBP and Sox2 was confirmed by immunofluorescence. We also detected overexpression of Mdm2 throughout the optic pathway in fish with OPG, therefore implicating the Mdm2-Tp53 pathway in glioma pathogenesis. In conclusion, we demonstrate that activated Shh signaling initiates tumorigenesis in the zebrafish CNS and provide the first OPG model not associated with neurofibromatosis 1.