The transcription factor Gli2 plays crucial roles in the transduction of Hedgehog (Hh) signals, yet the mechanisms that control Gli2 degradation remain unclear. Here we have identified the eubiquitinating enzyme otubain2 (OTUB2) as a regulator of Gli2 protein degradation. We found that OTUB2 was coimmunoprecipitated with Gli2. Knockdown of OTUB2 decreased Gli2 protein level while the proteasome inhibitor MG-132 treatment restored Gli2 expression. Additionally, OTUB2 overexpression stabilized Gli2 protein in U2OS cells and extended the half-life of Gli2. We also found that knockdown of OTUB2 reduced deubiquitination of Gli2 in vivo. In vitro deubiquitination assay showed that ubiquitinated Gli2 was decreased by wild-type OTUB2 but not OTUB2 mutations. We also found that OTUB2 knockdown suppressed the ALP activity and the expression of the common markers BMP2 and RUNX2 during osteogenesis of MSCs in response to Shh and Smo agonists, which indicated OTUB2 may have effect on osteogenic differentiation by regulating Hh signaling.