Skp1‐Cul1‐F‐box protein (SCF) ubiquitin ligases direct cell survival decisions by controlling protein ubiquitylation and degradation. Sufu (Suppressor of fused) is a central regulator of Hh (Hedgehog) signaling and acts as a tumor suppressor by maintaining the Gli (Glioma‐associated oncogene homolog) transcription factors inactive. Although Sufu has a pivotal role in Hh signaling, the players involved in controlling Sufu levels and their role in tumor growth are unknown. Here, we show that Fbxl17 (F‐box and leucine‐rich repeat protein 17) targets Sufu for proteolysis in the nucleus. The ubiquitylation of Sufu, mediated by Fbxl17, allows the release of Gli1 from Sufu for proper Hh signal transduction. Depletion of Fbxl17 leads to defective Hh signaling associated with an impaired cancer cell proliferation and medulloblastoma tumor growth. Furthermore, we identify a mutation in Sufu, occurring in medulloblastoma of patients with Gorlin syndrome, which increases Sufu turnover through Fbxl17‐mediated polyubiquitylation and leads to a sustained Hh signaling activation. In summary, our findings reveal Fbxl17 as a novel regulator of Hh pathway and highlight the perturbation of the Fbxl17–Sufu axis in the pathogenesis of medulloblastoma.