Negative regulator in the hedgehog/smoothened signaling pathway (PubMed:10559945, PubMed:10564661, PubMed:10806483, PubMed:12068298, PubMed:12975309, PubMed:15367681, PubMed:22365972, PubMed:24217340, PubMed:24311597, PubMed:27234298, PubMed:28965847). Down-regulates GLI1-mediated transactivation of target genes (PubMed:15367681, PubMed:24217340, PubMed:24311597). Down-regulates GLI2-mediated transactivation of target genes (PubMed:24217340, PubMed:24311597). Part of a corepressor complex that acts on DNA-bound GLI1. May also act by linking GLI1 to BTRC and thereby targeting GLI1 to degradation by the proteasome (PubMed:10559945, PubMed:10564661, PubMed:10806483, PubMed:24217340). Sequesters GLI1, GLI2 and GLI3 in the cytoplasm, this effect is overcome by binding of STK36 to both SUFU and a GLI protein (PubMed:10559945, PubMed:10564661, PubMed:10806483, PubMed:24217340). Negative regulator of beta-catenin signaling (By similarity). Regulates the formation of either the repressor form (GLI3R) or the activator form (GLI3A) of the full-length form of GLI3 (GLI3FL) (PubMed:24311597, PubMed:28965847). GLI3FL is complexed with SUFU in the cytoplasm and is maintained in a neutral state (PubMed:24311597, PubMed:28965847). Without the Hh signal, the SUFU-GLI3 complex is recruited to cilia, leading to the efficient processing of GLI3FL into GLI3R (PubMed:24311597, PubMed:28965847). When Hh signaling is initiated, SUFU dissociates from GLI3FL and the latter translocates to the nucleus, where it is phosphorylated, destabilized, and converted to a transcriptional activator (GLI3A) (PubMed:24311597, PubMed:28965847). Required for normal embryonic development (By similarity). Required for the proper formation of hair follicles and the control of epidermal differentiation (By similarity).