Cell surface reception of Sonic hedgehog (Shh) must ensure that the graded morphogenic signal is interpreted accordingly in neighboring cells to specify tissue patterns during development. Here, we report endocytic sorting signals for the receptor Patched1 (Ptch1), comprising two ‘PPXY’ motifs, that direct it to degradation in lysosomes. These signals are recognized by two HECT-domain ubiquitin E3 ligases, Smurf1 and Smurf2, which are induced by Shh and become enriched in Caveolin-1 lipid rafts in association with Ptch1. Smurf-mediated endocytic turnover of Ptch1 is essential for its clearance from the primary cilium and pathway activation. Removal of both Smurfs completely abolishes the ability of Shh to sustain the proliferation of postnatal granule cell precursors in the cerebellum. These findings reveal a novel step in the Shh pathway activation as part of the Ptch1 negative feedback loop that precisely controls the signaling output in response to Shh gradient signal.

DOI: http://dx.doi.org/10.7554/eLife.02555.001