Hedgehog proteins constitute one of the major classes of intercellular sign
als that control inductive interactions during animal development. These pr
oteins undergo unusual lipid modifications and signal through an unconventi
onal transmembrane protein receptor that is characterized by a sequence mot
if implicated in sterol sensing. Recent studies suggest that the lipid addu
cts regulate the range and potency of the signals, whereas the sterol-sensi
ng domain is essential for receptor activity.