Heparan sulfate proteoglycans are critical for the organization of the extracellular distribution of Wingless

Recent studies in Drosophila have shown that heparan sulfate proteoglycans (HSPGs) are required for Wingless (Wg/Wnt) signaling. In addition, genetic and phenotypic analyses have implicated the glypican gene daily in this pro cess. Here, we report the identification of another Drosophila glypican gen e, daily-like (dly) and show that it is also involved in Wg signaling. Inhi bition of dly gene activity implicates a function for DLY in Wg reception a nd we show that overexpression of DLY leads to an accumulation of extracell ular Wg. We propose that DLY plays; a role in the extracellular distributio n of Wg. Consistent with this model, a dramatic decrease of extracellular W g was detected in clones of cells that are deficient in proper glycosaminog lycan biosynthesis. We conclude that HSPGs play an important role in organi zing the extracellular distribution of Wg.