Cellular responses to the graded Sonic Hedgehog (Shh) morphogenic signal are orchestrated by three Gli genes that give rise to both transcription activators and repressors. An essential downstream regulator of the pathway, encoded by the tumor suppressor gene Suppressor of fused (Sufu), plays critical roles in the production, trafficking, and function of Gli proteins, but the mechanism remains controversial. Here, we show that Sufu is upregulated in active Shh responding tissues and accompanies Gli activators translocating into and Gli repressors out of the nucleus. Trafficking of Sufu to the primary cilium, potentiated by Gli activators but not repressors, was found to be coupled to its nuclear import. We have identified a nuclear export signal (NES) motif of Sufu in juxtaposition to the protein kinase A (PKA) and glycogen synthase kinase 3 (GSK3) dual phosphorylation sites and show that Sufu binds the chromatin with both Gli1 and Gli3. Close comparison of neural tube development among individual Ptch1 Ϫ/Ϫ , Sufu Ϫ/Ϫ , and Ptch1 Ϫ/Ϫ ; Sufu Ϫ/Ϫ double mutant embryos indicates that Sufu is critical for the maximal activation of Shh signaling essential to the specification of the most-ventral neurons. These data define Sufu as a novel class of molecular chaperone required for every aspect of Gli regulation and function.

Reversible phosphorylation of Suppressor of fused (Sufu) is essential for Sonic Hedgehog (Shh) signal transduction. Sufu is stabilized under dual phosphorylation of protein kinase A (PKA) and glycogen synthase kinase 3β (GSK3β). Its phosphorylation is reduced with the activation of Shh signaling. However, the phosphatase in this reversible phosphorylation has not been found. Taking advantage of a proteomic approach, we identified Protein phosphatase 4 regulatory subunit 2 (Ppp4r2), an interacting protein of Sufu. Shh signaling promotes the interaction of these two proteins in the nucleus, and Ppp4 also promotes dephosphorylation of Sufu, leading to its degradation and enhancing the Gli1 transcriptional activity. Finally, Ppp4-mediated dephosphorylation of Sufu promotes proliferation of medulloblastoma tumor cells, and expression of Ppp4 is positively correlated with up-regulation of Shh pathway target genes in the Shh-subtype medulloblastoma, underscoring the important role of this regulation in Shh signaling.