Suppressor of Fused (SuFu), a tumour suppressor mutated in medulloblastoma, is a central player of Hh signalling, a pathway crucial for development and deregulated in cancer. Although the control of Gli transcription factors by SuFu is critical in Hh signalling, our understanding of the mechanism regulating this key event remains limited. Here, we show that the Itch/β-arrestin2 complex binds SuFu and induces its Lys63-linked polyubiquitylation without affecting its stability. This process increases the association of SuFu with Gli3, promoting the conversion of Gli3 into a repressor, which keeps Hh signalling off. Activation of Hh signalling antagonises the Itch-dependent polyubiquitylation of SuFu. Notably, different SuFu mutations occurring in medulloblastoma patients are insensitive to Itch activity, thus leading to deregulated Hh signalling and enhancing medulloblastoma cell growth. Our findings uncover mechanisms controlling the tumour suppressive functions of SuFu and reveal that their alterations are implicated in medulloblastoma tumorigenesis.