Glypicans are glycophosphatidylinositol (GPI)-anchored heparan sulfate proteoglycans that regulate the signaling of morphogens, including Wnt, Hedgehog (Hh), bone morphogenetic proteins (BMPs), and fibroblast growth factors (FGFs). Two articles show that glypicans can have opposing functions in Hedgehog signaling. Capurro et al . sought to determine how loss-of-function mutations in glypican-3 (GPC3), one of six mammalian glypicans, produce a developmental overgrowth phenotype that appears to arise by excessive proliferation and is associated with Simpson-Golabi-Behmel syndrome in humans. Increased mRNA abundance of Hh targets, as determined by reverse transcription polymerase chain reaction, suggested that signaling through the Hedgehog pathway was increased in GPC3-null mouse embryos. With cultured cells, they found that activation of a Hh reporter gene by Sonic hedgehog (Shh) or Indian hedgehog (Ihh) was inhibited when GPC3 was overexpressed and that this inhibition was retained in a GPC3 mutant (GPC3ΔGAG ) that could not be glycanated, suggesting that the core protein without heparan sulfate has biological activity. Activity required the GPI anchor, and inhibition of Hh reporter gene activation was not detected if a soluble form of GPC3 was expressed or if GPC3 was anchored to the membrane through a chimeric transmembrane domain from syndecan. Shh and GPC3 or GPC3ΔGAG coimmunoprecipitated when transiently transfected into cells, Shh bound to the surface of cells expressing GPC3, and GPC3 and GPC3ΔGAG both interacted with Shh in a surface plasmon resonance assay. Overexpression of GPC3 reduced the amount of Shh that coimmunoprecipitated with the Hedgehog receptor Patched1 (Ptc1), suggesting that GPC3 may compete with Ptc1 for Shh. GPC3-expressing cells triggered the endocytosis of Shh and the two proteins colocalized with markers of endosomes and lysosomes, suggesting that GPC3 may inhibit Hedgehog signaling by removing Hh from the cell surface. Consistent with this model, GPC3-null mouse embryos showed increased abundance of Shh based on Western blotting and immunohistochemistry of tissue sections. Hh and Wingless (Wg, also known as Wnt) signaling are involved in wing morphogenesis in Drosophila . Gallet et al . found that endocytosis of Hh and Ptc was enhanced by the glypican Dally-like (Dlp) and that this was required for full activation of the Hh pathway. Flies homozygous for the dlp 20 allele, which is a functional knockout, exhibited decreased expression of Hh target genes ( engrailed , Ptc , and decapentaplegic ) in the wing imaginal disc, and the zone in which they were expressed was narrower. A green fluorescent protein (GFP)-Dlp fusion protein colocalized with Hh and Ptc in intracellular vesicles in the imaginal disc cells. The GPI anchor of Dlp was required for Dlp internalization because replacement of the GPI anchor with a transmembrane domain (GFP-Dlp-CD2) did not produce colocalization. The number of Ptc- and Hh-positive vesicles was decreased in the dlp 20 mutants or flies expressing GFP-Dlp-CD2, whereas overexpression of GFP-Dlp increased the number of vesicles containing both Ptc and Hh. GFP-Dlp, but not GFP-Dlp-CD2, rescued the dlp 20 phenotype, suggesting that endocytosis of Dlp was important for its ability to enhance Hh signaling. Dlp was detected at the apical surface of disc epithelial cells and was endocytosed and translocated to the basolateral compartment, a process that was blocked in flies expressing a dominant-negative form of dynamin, which is required for some types of endocytosis. Ptc was stabilized at both the apical and basolateral sides of cells expressing dominant-negative dynamin, and decapentaplegic expression was decreased, suggesting impairment of Hh signaling. Dlp also contributed to Wg signaling and appeared to facilitate the endocytosis and transcytosis of Wg from the apical surface to the basolateral surface to contribute to the spread of Wg. Thus, these two papers show that glypicans use their GPI anchors to mediate endocytosis and that this either can enhance Hh signaling by stimulating internalization of the ligand-bound receptor or can inhibit Hh signaling by removing the ligand from the cell surface and preventing its interaction with its receptor Ptc. M. I. Capurro, P. Xu, W. Shi, F. Li, A. Jia, J. Filmus, Glypican-3 inhibits Hedgehog signaling during development by competing with Patched for Hedgehog binding. Dev. Cell 14 , 700-711 (2008). [PubMed] A. Gallet, L. Staccini-Lavenant, P. P. Thérond, Cellular trafficking of the glypican Dally-like is required for full-strength Hedgehog signaling and Wingless transcytosis. Dev. Cell 14 , 712-725 (2008). [PubMed]