Project summary The Hedgehog (Hh) and Wnt signaling pathways are essential for embryogenesis, adult stem cell maintenance, and are deeply involved in cancer and birth defects. Both pathways are activated by lipid- modified secreted ligands: Hh ligands are modified with palmitate and cholesterol, while Wnt ligands are modified with palmitate. Lipidation is essential for the function of Hh and Wnt ligands, but it makes them stick strongly to membranes, raising the question of how they spread from producing cells. We discovered that Hh is released from cells by forming a stable complex with a dedicated carrier protein, Scube, a process catalyzed by the membrane transporter Dispatched, which uses the energy of the plasma membrane sodium gradient. Scube then delivers Hh to its receptor, the tumor suppressor membrane protein Patched, triggering specific cellular responses. We found that, surprisingly, Scube blocks binding of Hh to Patched, raising the question of how the Scube-Hh complex activates signaling. We discovered that three cell surface proteins Cdon, Boc and Gas1, known as co-receptors for Hh, are essential for signaling by Scube- Hh. Specifically, we showed that the Hh co-receptors define a novel sequential pathway whereby Cdon and Boc recruit Scube-Hh to the cell surface, after which Gas1 catalyzes Hh transfer from Scube to Patched. We also used cryo-electron microscopy to determine the structure of Dispatched-Hh and Gas1-Hh-Patched complexes, which capture Hh in the process of release and delivery, respectively. Finally, we discovered two families of secreted proteins that function as carriers for Wnts, explaining how Wnts are released in soluble and active form. Our findings open several critical questions about Hh and Wnt signaling. We propose combining biochemistry, structural, chemical and cell biology to accomplish the following aims: 1) To determine how Dispatched and Scube cooperate to release Hh ligands 2) To elucidate how Gas1 catalyzes formation of the Hh-Patched complex, to trigger Hh signaling 3) To elucidate how Wnt ligands are secreted and then delivered to responding cells These studies are important for the following reasons: A) They will advance understanding of the Hh and Wnt pathways, by elucidating critical pathways controlling the ligands; B) They will identify novel targets for blocking signaling in cancer, based on the mechanisms of Hh and Wnt ligand release and delivery; and C) Our novel chemical probes will be broadly applicable to study cholesterol and fatty acids in health and in disease.