Has a dual function as a transcriptional activator and a repressor of the sonic hedgehog (Shh) pathway, and plays a role in limb development. The full-length GLI3 form (GLI3FL) after phosphorylation and nuclear translocation, acts as an activator (GLI3A) while GLI3R, its C-terminally truncated form, acts as a repressor. A proper balance between the GLI3 activator and the repressor GLI3R, rather than the repressor gradient itself or the activator/repressor ratio gradient, specifies limb digit number and identity. In concert with TRPS1, plays a role in regulating the size of the zone of distal chondrocytes, in restricting the zone of PTHLH expression in distal cells and in activating chondrocyte proliferation. Binds to the minimal GLI-consensus sequence 5'-GGGTGGTC-3'.