Hedgehog (Hh) and Wnt proteins are important signals implicated in several aspects of embryonic development, including the early development of the central nervous system. We found that Xenopus Suppressor-of-fused (XSufu) affects neural induction and patterning by regulating the Hh/Gli and Wnt/β-catenin pathways. Microinjection of XSufu mRNA induced expansion of the epidermis at the expense of neural plate tissue and caused enlargement of the eyes. An antisense morpholino oligonucleotide against XSufu had the opposite effect. Interestingly, both gain- and loss-of-function experiments resulted in a posterior shift of brain markers, suggesting a biphasic effect of XSufu on anteroposterior patterning. XSufu blocked early Wnt/β-catenin signaling, as indicated by the suppression of XWnt8-induced secondary axis formation in mRNA-injected embryos, and activation of Wnt target genes in XSufu-MO-injected ectodermal explants. We show that XSufu binds to XGli1 and Xβ-catenin. In Xenopus embryos and mouse embryonic fibroblasts, Gli1 inhibits Wnt signaling under overexpression of β-catenin, whereas β-catenin stimulates Hh signaling under overexpression of Gli1. Notably, endogenous Sufu is critically involved in this crosstalk. The results suggest that XSufu may act as a common regulator of Hh and Wnt signaling and contribute to intertwining the two pathways.