Data presented herein provides a rapid and efficient method for Agrobacterium rhizogenes-mediated genetic transformation of Arnebia hispidissima for hairy root cultures as well as for enhancing Shikonin production. Etiolated explants viz. shoot tip, nodal, leaf and internodal segments were co-cultivated with Agrobacterium rhizogenes for induction of hairy root. Among the various explants employed, leaf explant showed maximum 70.7% response followed by shoot tip 48.3%, nodal segment 38.7% and internodal segment 9.3%. Integration of Ri plasmid rolB gene in the transformed hairy root cultures was confirmed by PCR analysis using forward (FrolB) and reverse (RrolB) primers of rolB gene resulting in the amplification of 0 ~ 0.8 kb fragments. Medium compositions have been optimized for in vitro induction of Shikonin in hairy root cultures of Arnebia hispidissima. Hairy roots on hormone-free MS medium showed red spots in the older part of the tissues which turned white after a second subculture. Whereas hairy roots cultured on RC medium showed faster growth and produced large amount of Shikonin. The Shikonin content in transformed hairy root culture was estimated by recording absorbance at 620 nm and quantified against authentic sample of Shikonin. Shikonin content was estimated to be $0.85;mg;g^{-1}$ fresh weight of tissue at the end of the 50 days of culture. The results presented herein will help to design strategies for bridging the gap between ever increasing demand and supply of raw products necessary for obtaining Shikonin for cosmetic, dyeing, food, medicinal, and pharmaceutical industries.