The Hedgehog pathway is a potent regulator of cellular growth and plays a central role in the development of many cancers including basal cell carcinoma (BCC). The majority of BCCs arise from mutations in the Patched receptor resulting in constitutive activation of the Hedgehog pathway. Secondary driver mutations promote BCC oncogenesis and occur frequently due to the high mutational burden resulting from sun exposure of the skin. Here, we uncover novel secondary mutations in Suppressor of Fused (SUFU), the major negative regulator of the Hedgehog pathway. SUFU normally binds to a Hedgehog transcriptional activator, GLI1, in order to prevent it from initiating transcription of Hedgehog target genes. We sequenced tumor-normal pairs from patients with early sporadic BCCs. This resulted in the discovery of nine mutations in SUFU, which were functionally investigated to determine whether they help drive BCC formation. Our results show that four of the SUFU mutations inappropriately activate the Hedgehog pathway, suggesting they may act as driver mutations for BCC development. Indeed, all four of the loss of function SUFU variants were found to disrupt its binding to GLI, leading to constitutive pathway activation. Our results from functional characterization of these mutations shed light on SUFU's role in Hedgehog signaling, tumor progression, and highlight a way in which BCCs can arise.