Dispatched, a novel sterol-sensing domain protein dedicated to the releaseof cholesterol-modified hedgehog from signaling cells

Members of the Hedgehog (Hh) family of secreted signaling proteins function as potent short-range organizers in animal development. Their range of act ion is limited by a C-terminal cholesterol tether and the upregulation of P atched (Ptc) receptor levels. Here we identify a novel segment-polarity gen e in Drosophila, dispatched (disp), and demonstrate that its product is req uired in sending cells for normal Hh function. In the absence of Disp, chol esterol-modified but not cholesterol-free Hh is retained in these cells, in dicating that Disp functions to release cholesterol-anchored Hh. Despite th eir opposite roles, Disp and Ptc share structural homology in the form of a sterol-sensing domain, suggesting that release and sequestration of choles terol-modified Hh may be based on related molecular pathways.