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 (Dip) in shaping the Wingless gradient in the Drosophila wing disc. Surprisingly, we find that Dip has opposite effects at high and low levels of Wingless. Dip 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 Dip glypican at the level of its GPI anchor, which leads to shedding of Dip. Thus, spatially regulated modification of Dip by Notum employs the ligand binding activity of Dip to promote or inhibit Signaling in a context-dependent manner. Notum-induced shedding of Dip could convert Dip from a membrane-tethered coreceptor to a secreted antagonist.