Dally-like core protein and its mammalian homologues mediate stimulatory and inhibitory effects on Hedgehog signal response.

The distribution and activities of morphogenic signaling proteins such as Hedgehog (Hh) and Wingless (Wg) depend on heparan sulfate proteoglycans (HSPGs). HSPGs consist of a core protein with covalently attached heparan sulfate glycosaminoglycan (GAG) chains. We report that the unmodified core protein of Dally-like (Dlp), an HSPG required for cell-autonomous Hh response in Drosophila embryos, alone suffices to rescue embryonic Hh signaling defects. Membrane tethering but not specifically the glycosylphosphatidylinositol linkage characteristic of glypicans is critical for this cell-autonomous activity. Our studies further suggest divergence of the two Drosophila and six mammalian glypicans into two functional families, an activating family that rescues cell-autonomous Dlp function in Hh response and a family that inhibits Hh response. Thus, in addition to the previously established requirement for HSPG GAG chains in Hh movement, these findings demonstrate a positive cell-autonomous role for a core protein in morphogen response in vivo and suggest the conservation of a network of antagonistic glypican activities in the regulation of Hh response.