Required for normal accumulation and movement of lipid-modified hedgehog (hh) morphogen. May act by stabilizing the interaction between heparan sulfate proteoglycans (HSPGs) and hh, HSPGs being required for diffusion of hh morphogen. Not involved in wingless (wg) morphogen movement, suggesting that it may provide HSPG specificity for Hh. Interacts with hh. Colocalizes with HSPG. At the blastoderm stage, it is ubiquitously expressed. As embryogenesis continues, it is expressed in the epidermis and central nervous system, this expression being segmentally modulated. Also highly expressed at the foregut and hindgut throughout embryogenesis. In third instar wing imaginal disks, it is highly expressed in the most anterior and posterior parts of the disk and weakly expressed at the antero/posterior (A/P) compartment border. In the leg disks and the antenna part of the eye-antennal imaginal disk it is also weakly expressed at the A/P compartment border. Weakly expressed in the morphogenetic furrow in the eye primordium. Expressed both maternally and zygotically. In contrast to human WIF1 protein, it does not inhibit wg signaling. When transfected into Drosophila, human WIF1 protein inhibits wg function, indicating a different role for shf and WIF-1.