Inhibitors of the Hedgehog (Hh) pathway transducer Smoothened (Smo) have been approved for cancer treatment, but Smo mutations often lead to tumor resistance and it remains unclear how Smo is regulated. In this study, we identified the small GTPase Arl13b as a novel partner and regulator of Smo. Arl13b regulated Smo stability, trafficking and localization which are each crucial for Hh signaling. In gastric cancer cells, Arl13b stimulated proliferation, migration and invasion in vitro and in vivo. In clinical specimens of gastric cancer, Arl13b expression correlated strongly with tumor size and depth of invasion; patients with high levels of Arl13b had a poor prognosis. Our results show how Arl13b participates in Hh pathway activation in gastric cancer.