Hedgehog (Hh) signalling plays a central role in many developmental processes in both vertebrates and invertebrates [1]. The multipass membrane-spanning proteins Patched (Ptc) [2-4] and Smoothened (Smo) [5-7] have been proposed to act as subunits of a putative Hh receptor complex. According to this view, Smo functions as the transducing subunit, the activity of which is blocked by a direct interaction with the ligand-binding subunit, Ptc [8]. Activation of the intracellular signalling pathway occurs when Hh binds to Ptc [8-11], an event assumed to release Smo from Ptc-mediated inhibition. Evidence for a physical interaction between Smo and Ptc is so far limited to studies of the vertebrate versions of these proteins when overexpressed in tissue culture systems [8,12]. To test this model, we have overexpressed the Drosophila Smo protein in vivo and found that increasing the levels of Smo protein per se was not sufficient for activation of the pathway. Immunohistochemical staining of wild-type and transgenic embryos revealed distinct patterns of Smo distribution, depending on which region of the protein was detected by the antibody. Our findings suggest that Smo is modified to yield a non-functional form and this modification is promoted by Ptc in a non-stoichiometric manner.