Posttranslational modifications by ubiquitin and ubiquitin-like proteins are important in regulating cellular protein functions. UFM1 (ubiquitin-fold modifier 1), first identified almost two decades ago, is a member of the ubiquitin-like protein family. UFM1 is covalently conjugated to the target proteins in an enzymatic cascade consisting of E1 (activating), E2 (conjugating), and E3 (ligating) enzymes. At the molecular level, modification by UFM1 (UFMylation) is an important mediator of the protein function. Dysregulation of the UFM1 system, e.g., the knockout of UFMylation components, disturbs proteome homeostasis and triggers endoplasmic reticulum stress. Such changes are linked to developmental disorders, tumorigenesis, tissue injury, inflammation, and several hereditary neurological syndromes. This review will focus on the role of the UFMylation in animal development and associated congenital disorders. We will cover the hematopoietic system, liver, central nervous system, intestine, heart, kidney, immune, and skeletal system to provide insight into disease pathogenesis and shed light on possible novel therapeutic methods.