Hedgehog (Hh) signalling regulates growth and differentiation in many vertebrate and invertebrate tissues. Central to the Hh signalling pathway is the repression of Smoothened (Smo) signalling (which regulates the transcription factor Cubitus interruptus) by the transmembrane receptor Patched (Ptc) when Hh is absent. Now, Suzanne Eaton and colleagues report that, in Drosophila wing discs, Ptc uses lipids derived from Lipophorin, a lipoprotein particle with which Hh associates, to regulate Smo signalling (see p. 4111). The researchers show that Drosophila Ptc, which resembles the lipid-trafficking protein Niemann-Pick type C-1, recruits internalised Lipophorin to Ptc-positive endosomes. A sterol-sensing domain in Ptc, they report, regulates trafficking of both lipids and Smo from this compartment. Furthermore, Ptc uses lipids derived from Lipophorin to destabilise Smo on basolateral membranes. The researchers suggest, therefore, that Ptc normally regulates Smo degradation by changing the lipid composition of the endosomes through which Smo passes and that Hh might signal, in part, by influencing how Ptc utilises the lipids in Lipophorin.