Modulates hedgehog signaling in several cell types, including brain and lung through direct interaction with members of the hedgehog family. Soluble forms inhibit Shh-induced differentiation in the fibroblast cell line C3H/10T1/2. Interacts with all three hedgehog family members, SHH, IHH and DHH. The last 22 C-terminal amino acids may participate in cell membrane attachment. In the adult brain, high expression found in the ventral cochlear nucleus, medial habenula, indusium griseum and tenia tecta. Some expression also in the caudate putamen, the nucleus accumbens, the ventral pallidum and in the superficial layers of the superior colliculus. First detected at 8.75 dpc, in the ventral midline of the neural tube and in the ventral medial somites. At 10.5 dpc, expression in the notochord is maintained in the caudal region. Expression is lost in the floor plate, but is retained in the ventral half of the neural tube and in the sclerotome of the adjacent somites. In the midbrain, expression confined to two lateral stripes adjacent to the floor plate. Also expressed in the gut mesenchyme along the length of the gastro-intestinal tract and in the mesenchyme of the posterior half of the limb. Expressed in the underlying mesenchyme of the epithelium of a number of tissues including lung, gut and whisker. Also expressed in the perichondrium and in the androgen-producing interstitial somatic cells of the developing testis. A flexible loop interacts with the SHH zinc binding site and contributes to zinc binding. Belongs to the HHIP family.