The Hedgehog (Hh) family of secreted signalling proteins specify distinct cell fates in a concentration-dependent manner throughout development. In this issue, two papers provide new information about how Hh signalling is regulated.

On p. 2033, Xinhua Lin and colleagues examine the regulation of Hh signalling in Drosophila by two cell-surface proteins – the glypican Dally-like (Dlp) and the Ig/fibronectin superfamily member Interference hedgehog (Ihog). Because Hh proteins carry lipid modifications, they associate with the cell membrane. Consequently, a key issue in Hh signalling is how Hh proteins are secreted and form concentration gradients. Here, the researchers show that the core protein of Dlp interacts with Hh and that this interaction is essential for the function of Dlp in Hh signalling. Overexpression experiments indicate that, in wing discs, Dlp enhances Hh signalling strength but reduces its signalling range. By contrast, Ihog overexpression in wing discs extends the Hh signalling range. In cultured imaginal disc cells, low Ihog levels increase Hh signalling, whereas high levels decrease it. These and other results suggest that Dlp acts as a Hh co-receptor, whereas Ihog acts as an exchange factor that retains Hh on the cell surface, while competing for Hh with the Hh receptor.

On p. 2001, Baolin Wang and colleagues investigate how the stability and processing of Gli2 and Gli3, transcriptional regulators that mediate Hh signalling in vertebrates, are regulated. Full-length Gli2 (Gli2FL) strongly activates Hh signalling but a small fraction is C-terminally processed to a repressor (Gli2Rep). By contrast, Gli3FL weakly activates Hh signalling but is mainly C-terminally processed. Thus, mechanisms that stabilise, destabilise and process Gli2 and Gli3 ensure a prompt response to Hh signalling. The researchers show here that suppressor of fused (Sufu, an inhibitor of Gli transcriptional activities) is essential for the stabilisation of Gli2FL and Gli3FL but not of Gli2Rep and Gli3Rep, whereas Spop (a substrate-binding adaptor for the cullin3-based ubiquitin E3 ligase) promotes Gli2FL and Gli3FL degradation. The researchers also unexpectedly discover that Gli3Rep can function independently of Sufu. Overall, these results provide new insights into how Sufu and Spop regulate Gli2 and Gli3 stability and processing to affect the transcriptional response to Hh signalling.