Opposing activities of Dally-like glypican at high and low levels of Wingless morphogen activity.

The glypican family of heparan sulfate proteoglycans has been implicated in formation of morphogen gradients. Here, we examine the role of the glypican Dally-like protein (Dlp) in shaping the Wingless gradient in the Drosophila wing disc. Surprisingly, we find that Dlp has opposite effects at high and low levels of Wingless. Dlp promotes low-level Wingless activity but reduces high-level Wingless activity. We present evidence that the Wg antagonist Notum acts to induce cleavage of the Dlp glypican at the level of its GPI anchor, which leads to shedding of Dlp. Thus, spatially regulated modification of Dlp by Notum employs the ligand binding activity of Dlp to promote or inhibit signaling in a context-dependent manner. Notum-induced shedding of Dlp could convert Dlp from a membrane-tethered coreceptor to a secreted antagonist.