The secreted protein Sonic hedgehog (Shh) exerts many of its patterning eff
ects through a combination of short- and long-range signalling(1-3). Three
distinct mechanisms, which are not necessarily mutually exclusive, have bee
n proposed to account for the long-range effects of Shh: simple diffusion o
f Shh, a relay mechanism in which Shh activates secondary signals, and dire
ct delivery of Shh through cytoplasmic extensions, termed cytonemes. Althou
gh there is much data (using soluble recombinant Shh (ShhN)) to support the
simple diffusion model of long-range Shh signalling(1,2), there has been l
ittle evidence to date for a native form of Shh that is freely diffusible a
nd not membrane-associated. Here we provide evidence for a freely diffusibl
e form of Shh (s-ShhNp) that is cholesterol modified, multimeric and biolog
ically potent. We further demonstrate that the availability of s-ShhNp is r
egulated by two functional antagonists of the Shh pathway, Patched (Ptc) an
d Hedgehog-interacting protein (Hip)(4-6). Finally, we show a gradient of s
-ShhNp across the anterior-posterior axis of the chick limb, demonstrating
the physiological relevance of s-ShhNp.