Sonic hedgehog protein signals not as a hydrolytic enzyme but as an apparent ligand for Patched

The amino-terminal signaling domain of the Sonic hedgehog secreted protein (Shh-N), which derives from the Shh precursor through an autoprocessing reaction mediated by the carboxyl-terminal domain, executes multiple functions in embryonic tissue patterning, including induction of ventral and suppression of dorsal cell types in the developing neural tube. An apparent catalytic site within Shh-N is suggested by structural homology to a bacterial carboxypeptidase, We demonstrate here that alteration of residues presumed to be critical for a hydrolytic activity does not cause a loss of inductive activity, thus ruling out catalysis by Shh-N as a requirement for signaling. We favor the alternative, that Shh-N functions primarily as a ligand for the putative receptor Patched (Ptc), This possibility is supported by new evidence for direct binding of Shh-N to Ptc and by a strong correlation between the affinity of Ptc-binding and the signaling potency of Shh-N protein variants carrying alterations of conserved residues in a particular region of the protein surface. These results together suggest that direct Shh-N binding to Ptc is a critical event in transduction of the Shh-N signal.