Prostate cancer is the leading cause of cancer-related death in men in the United States. A major cause of drug resistance in prostate and other epithelial tumors may be due to the presence of a fraction of tumor cells that retain the ability to initiate tumors and hence are termed tumor-initiating cells (TIC) or cancer stem cells. Here, we report that darinaparsin, an organic derivative of arsenic trioxide, is cytotoxic to prostate cancer cell lines as well as fresh prostate cancer cells from patients at low micromolar concentrations, and importantly inhibits the TIC subpopulations. It also inhibits growth of the castrate-resistant Du145 prostate tumor propagated as xenograft in mice and inhibits the tumor-initiating potential of prostate cancer cells. Although the mechanism by which darinaparsin acts is not completely known, we show that it kills prostate cancer cells by blocking cells in the G₂–M phase of the cell cycle and inhibits Hedgehog signaling by downregulating Gli-2 transcriptional activity. These data provide a rationale for evaluating darinaparsin in patients with castrate-resistant prostate cancer. Mol Cancer Ther; 14(1); 23–30. ©2014 AACR.