The Hedgehog (Hh) morphogen directs distinct cell responses according to its distinct signalling levels. Hh signalling stabilizes transcription factor cubitus interruptus (Ci) by prohibiting SCF(Slimb)-dependent ubiquitylation and proteolysis of Ci. How graded Hh signalling confers differential SCF(Slimb)-mediated Ci proteolysis in responding cells remains unclear. Here, we show that in COP9 signalosome (CSN) mutants, in which deneddylation of SCF(Slimb) is inactivated, Ci is destabilized in low-to-intermediate Hh signalling cells. As a consequence, expression of the low-threshold Hh target gene dpp is disrupted, highlighting the critical role of CSN deneddylation on low-to-intermediate Hh signalling response. The status of Ci phosphorylation and the level of E1 ubiquitin-activating enzyme are tightly coupled to this CSN regulation. We propose that the affinity of substrate-E3 interaction, ligase activity and E1 activity are three major determinants for substrate ubiquitylation and thereby substrate degradation in vivo.