A key factor in oncogenesis is the transport into the nucleus of oncogenic signalling molecules, such as Gli1 (glioma-associated oncogene homologue 1), the central transcriptional activator in the Hedgehog signalling pathway. Little is known, however, how factors such as Gli are transported into the nucleus and how this may be regulated by interaction with other cellular factors, such as the negative regulator suppressor of fused (SuFu). In the present study we show for the first time that nuclear entry of Gli1 is regulated by a unique mechanism through mutually exclusive binding by its nuclear import factor Impβ1 (importin β1) and SuFu. Using quantitative live mammalian cell imaging, we show that nuclear accumulation of GFP-Gli1 fusion proteins, but not of a control protein, is specifically inhibited by co-expression of SuFu. Using a direct binding assay, we show that Impβ1 exhibits a high nanomolar affinity to Gli1, with specific knockdown of Impβ1 expression being able to inhibit Gli1 nuclear accumulation, thus implicating Impβ1 as the nuclear transporter for Gli1 for the first time. SuFu also binds to Gli1 with a high nanomolar affinity, intriguingly being able to compete with Impβ1 for binding to Gli1, through the fact that the sites for SuFu and Impβ1 binding overlap at the Gli1 N-terminus. The results indicate for the first time that the relative intracellular concentrations of SuFu and Impβ1 are likely to determine the localization of Gli1, with implications for its action in cancer, as well as in developmental systems.