Regulator of Hedgehog (Hh), required for both activation and inhibition of the Hh pathway in the patterning of the neural tube. During neural tube development, it is required for formation of the most ventral cell types and for full Hh pathway activation. Functions in Hh signal transduction to fully activate the pathway in the presence of high Hh levels and to repress the pathway in the absence of Hh signals. Modulates Hh signal transduction downstream of SMO and RAB23.