Hedgehog (Hh) pathway inhibitors such as vismodegib are highly effective for treating basal cell carcinoma (BCC); however, residual tumor cells frequently persist and regenerate the primary tumor upon drug discontinuation. Here, we show that BCCs are organized into two molecularly and functionally distinct compartments. Whereas interior Hh⁺/Notch⁺ suprabasal cells undergo apoptosis in response to vismodegib, peripheral Hh⁺⁺⁺/Notch⁻ basal cells survive throughout treatment. Inhibiting Notch specifically promotes tumor persistence without causing drug resistance, while activating Notch is sufficient to regress already established lesions. Altogether, these findings suggest that the three-dimensional architecture of BCCs establishes a natural hierarchy of drug response in the tumor and that this hierarchy can be overcome, for better or worse, by modulating Notch.