Project Summary Hedgehog (Hh) signaling specifies the embryonic tissue pattern of many metazoan organs and maintains this tissue pattern post-embryonically by regulating the expression of proliferation- or differentiation-inducing signals that target adult tissue stem or progenitor cells. Drugs developed to block Hh pathway activity, based on our previous work, have received FDA approval for treatment of ectodermally-derived cancers, such as basal cell carcinoma. In pancreatic, bladder, and other cancers of endodermal origin, Hh pathway activity in tumor- associated stroma presents a barrier to tumor growth and progression, thus suggesting pathway activation rather than inhibition as a therapeutic approach. In addition, pathway activation has a beneficial regenerative role in bone and muscle repair, in reducing pathology associated with inflammatory bowel disease, and in preventing or ameliorating injury and breach of the blood-brain-barrier, among other emerging biological activities. On the other hand, chronic low-level elevation of pathway activity in the lung, as is associated with reduced expression of the Hh pathway inhibitor Hhip (Hh-interacting protein), is genetically linked to chronic obstructive pulmonary disease (COPD), the third leading cause of death worldwide. During the previous funding period for this project we utilized protein structure determination and biochemical and cell biological approaches to establish the molecular mechanism of Hh signaling, in which Hh binding to its receptor Patched1 (Ptch1) activates the pathway by alleviating Ptch1-mediated suppression of the essential transducer and GPCR family member, Smoothened (Smo). We found that cholesterol is the crucial link between Ptch1 and Smo, that cholesterol in the inner leaflet of the membrane is decreased by Ptch1 transport activity, and that Hh binding to Ptch1 blocks this transport activity. These events critically regulate pathway activity, as conformational switching of Smo to its active state requires entry and binding of a sterol from the inner leaflet of the membrane into a central cavity within the Smoothened seven-transmembrane bundle. We also showed how the Dispatched1 (Disp1) transporter, structurally related to Ptch1, uses Na+ flux to power its export and packaging of the dually lipid modified Sonic hedgehog protein signal (ShhNp), enabling it to move through tissues as a soluble morphogen in complex with its carrier Scube2. We propose here to deepen our understanding of Hh signal transduction and pathway regulation by establishing the energy sources and the step-by-step lipid- handling mechanisms of the Ptch1 and Disp1 transporters. We will determine the structure of the ShhNp:Scube2 morphogen, and the mechanism of its release from Disp1. Finally we plan to elucidate the mechanism of Hh signal antagonism by Hhip, using cryo-EM to determine the high-resolution structure and functionally dissect a membrane-associated tent-like Hhip multimeric complex that...