Regulated proteolysis is a critical feature of many intercellular signallin
g pathways that control cell-fate specification and tissue patterning durin
g metazoan development. The roles of proteolysis in three different pathway
s, the Toll, Hedgehog, and Notch pathways, are described to illustrate the
importance of specific protein cleavages in both extracellular ligand-recep
tor interactions and intracellular signal transduction. An emerging princip
le is the use of proteolysis to control the maturation and activation of re
ceptors, to limit the spatial diffusion of their ligands, and to modulate t
he subcellular localization or transcriptional activity of DNA-binding fact
ors in response to receptor-ligand interactions at the cell surface.