Hedgehog (Hh) is a crucial regulator of development that acts over short and long ranges to control cell fate decisions. How Hh spreads to form a signalling gradient is particularly intriguing because active Hh is lipid modified (it carries cholesterol and palmitoyl adducts), and lipid-modified proteins are usually membrane tethered. Previous findings about the role of lipid modification in Hh signalling have been contradictory, with results differing in particular between vertebrates and Drosophila. Now two papers shed light on these events but also raise more questions. On p. 471, Callejo and colleagues report that lipid modification is required for Hh to interact with heparan sulphate proteoglycans (HSPGs). This interaction, they report,restricts the spread of lipid-modified Hh in the fly wing disc and leads to the activation of high Hh threshold response genes, perhaps with HSPGs acting as a co-receptor. Unlipidated Hh forms more extensive gradients, spreading for many more cell diameters than lipidated Hh and inducing the same low threshold-response genes as lipidated Hh, independently of HSPGs. The two Hh forms are also internalised differently – lipidated Hh laterally and unlipdated Hh through the apical membrane. Together, these results indicate that lipid modification plays a conserved role in Hh signalling by affecting multimerisation, Hh spreading and signalling activity. On p. 407, Gallet et al. also conclude that Hh lipid modification serves this conserved role but from quite different results. These authors compared the behaviour of lipidated Hh with that of a truncated, cholesterol-free (Hh-N) form in Drosophilaembryonic ectoderm and imaginal disc tissue. The absence of cholesterol, they report, affects the secretion of Hh, its multimerisation and also,intriguingly, its long-range signalling activity. For example, distant cell types in the dorsal ectoderm, which require low Hh levels, are absent in Hh-N-expressing embryos, indicating that the range of activity of Hh-N is limited. From these and other results, the authors propose that cholesterol modification is required for the controlled planar movement of Hh to prevent its unrestricted spreading. Future experiments should resolve how lipid modification affects the precise range and activity of Hh in different fly tissues and the degree to which such events are conserved.