Ubiquitin C-terminal hydrolase involved in development and the imd/NF-kappa-B (IMD) signaling cascade (PubMed:23919485, PubMed:1295747). Required for eye and embryo development, and plays a role in compound eye assembly and oogenesis respectively (PubMed:1295747). In the larval eye disks, cells outside the assembling facets require this protein for short-range cell interactions that prevent the mystery cells from becoming photoreceptors (PubMed:1295747). Also required for nuclear migration and cellularization in early embryogenesis and could play a role in pole cell determination, development or function (PubMed:1295747). Regulates the IMD signaling cascade at later stages of infection (around 6 hours post-infection) by inhibiting the expression of the antimicrobial peptides Dpt and Dro (PubMed:23919485). Acts by modulating the state of imd polyubiquitination and/or stability; a function which appears to be independent of its enzymatic activity (PubMed:23919485). In turn, imd enhances the polyubiquitination and stability of faf suggesting that they may form a regulatory feedback mechanism within the Imd pathway (PubMed:23919485). Thiol-dependent hydrolysis of ester, thioester, amide, peptide and isopeptide bonds formed by the C-terminal Gly of ubiquitin (a 76-residue protein attached to proteins as an intracellular targeting signal). Interacts with imd. Experimental confirmation may be lacking for some isoforms. Eye disks and ovaries (PubMed:1295747). Expressed in larval fat body (PubMed:23919485). Expressed both maternally and zygotically. Ubiquitinated. Ubiquitination is enhanced by the expression of imd. Belongs to the peptidase C19 family.