Ubiquitin-mediated proteolysis regulates the steady-state abundance of proteins and controls cellular homoeostasis by abrupt elimination of key effector proteins. A multienzyme system targets proteins for destruction through the covalent attachment of a multiubiquitin chain. The specificity and timing of protein ubiquitination is controlled by ubiquitin ligases, such as the Skp1-Cullin-F box protein complex. Cullins are major components of SCF complexes, and have been implicated in degradation of key regulatory molecules including Cyclin E, beta-catenin and Cubitus interruptus. Here, we describe the genetic identification and molecular characterisation of the Drosophila Cullin-3 homologue. Perturbation of Cullin-3 function has pleiotropic effects during development, including defects in external sensory organ development, pattern formation and cell growth and survival. Loss or overexpression of Cullin-3 causes an increase or decrease, respectively, in external sensory organ formation, implicating Cullin-3 function in regulating the commitment of cells to the neural fate. We also find that Cullin-3 function modulates Hedgehog signalling by regulating the stability of full-length Cubitus interruptus (Ci155). Loss of Cullin-3 function in eye discs but not other imaginal discs promotes cell-autonomous accumulation of Ci155. Conversely, overexpression of Cullin-3 results in a cell-autonomous stabilisation of Ci155 in wing, haltere and leg, but not eye, imaginal discs suggesting tissue-specific regulation of Cullin-3 function. The diverse nature of Cullin-3 phenotypes highlights the importance of targeted proteolysis during Drosophila development.