E3 ubiquitin-protein ligase which is a component of the N-end rule pathway (By similarity). Recognizes and binds to proteins bearing specific N-terminal residues, leading to their ubiquitination and subsequent degradation (By similarity). Positively regulates hedgehog/shh-signaling pathways that function in eye development, neuronal specification and somite development (PubMed:27195754). Activation of shh up-regulates transcription of ubr3, which in turn promotes hedgehog/shh signaling possibly by controlling negative regulators such as Kif7 (PubMed:27195754). S-ubiquitinyl-[E2 ubiquitin-conjugating enzyme]-L-cysteine + [acceptor protein]-L-lysine = [E2 ubiquitin-conjugating enzyme]-L-cysteine + N(6)-ubiquitinyl-[acceptor protein]-L-lysine. Protein modification; protein ubiquitination. Expressed in the embryonic retina, central nervous system and trunk (at the protein level). Heterozygotes fail to form cohesive and stratified epithelium in their optic vesicles. Average somite angle is increased by 30% and the posterior central nervous system displays a gain of Rohon-Beard sensory neurons. Defects are the result of decreased Hh/shh-signaling demonstrated by the reduced expression of the Hh/shh target gene ptch2. Belongs to the UBR1 family.