The C-terminal part of the hedgehog protein precursor displays an autoproteolysis activity that results in the cleavage of the full-length protein into two parts (N-product and C-product) (PubMed:7885476). In addition, the C-terminal part displays a cholesterol transferase activity that results by the covalent attachment of a cholesterol moiety to the C-terminal of the newly generated N-product (By similarity). Once cleaved, the C-product has no signaling activity and diffuses from the cell (PubMed:12586063). The dually lipidated hedgehog protein N-product is a morphogen which is essential for a variety of patterning events during development (PubMed:25639794, PubMed:27195754, PubMed:8166882, PubMed:1394430, PubMed:1340474, PubMed:11319862). Establishes the anterior-posterior axis of the embryonic segments and patterns the larval imaginal disks. Binds to the patched (ptc) receptor, which functions in association with smoothened (smo), to activate the transcription of target genes wingless (wg), decapentaplegic (dpp) and ptc. In the absence of hh, ptc represses the constitutive signaling activity of smo through fused (fu). Essential component of a signaling pathway which regulates the Duox-dependent gut immune response to bacterial uracil; required to activate Cad99C-dependent endosome formation, norpA-dependent Ca2+ mobilization and p38 MAPK, which are essential steps in the Duox-dependent production of reactive oxygen species (ROS) in response to intestinal bacterial infection (PubMed:25639794). During photoreceptor differentiation, it up-regulates transcription of Ubr3, which in turn promotes the hh-signaling pathway by mediating the ubiquitination and degradation of cos (PubMed:27195754, PubMed:25639794, PubMed:8166882, PubMed:1394430, PubMed:1340474, PubMed:11319862). cholesterol + glycyl-L-cysteinyl-[protein] + H(+) = [protein]-C-terminal glycyl cholesterol ester + N-terminal L-cysteinyl-[protein] Interacts with shf. Nuclear up to embryonic stage 10 and then at stage 11 shifts to the cytoplasm (PubMed:1280560). Also secreted in either cleaved or uncleaved form to mediate signaling to other cells (PubMed:1280560). The N-terminal peptide remains associated with the cell surface (PubMed:12586063). Heparan sulfate proteoglycans of the extracellular matrix play an essential role in diffusion. Lipophorin is required for diffusion, probably by acting as vehicle for its movement, explaining how it can spread over long distances despite its lipidation (PubMed:15875013). In embryos, expression starts at stage 5 as a few stripes at the anterior and posterior ends, this expands to 17 stripes during stages 8-11 (PubMed:8166882, PubMed:1280560, PubMed:1340474). Expression is also seen in CNS and some PNS cells until stage 13-14, and in foregut, hindgut and salivary glands (PubMed:1340474). In larvae, expression is seen in the posterior compartment of the wing, leg and antennal imaginal disks (PubMed:1394430, PubMed:1340474). In adults, high level of expression in specific regions of the proventriculus and hindgut, with slightly lower levels of expression in the posterior midgut (PubMed:25639794). Relatively low levels of expression in the anterior midgut region (PubMed:25639794). Expressed in embryos, larvae and pupae at high levels with maximum expression in 6-12 hours embryos and 0-24 hours pupae (PubMed:8166882, PubMed:1394430, PubMed:1280560, PubMed:1340474). Low levels of expression are seen in adults (PubMed:8166882, PubMed:1394430). Strongly up-regulated in the anterior midgut and the posterior midgut in response to bacterial uracil. The C-terminal part of the hedgehog protein precursor displays an autoproteolysis activity that results in the cleavage of the full-length protein into two parts (N-product and C-product) (PubMed:7885476). In addition, the C-terminal part displays a cholesterol transferase activity that results by the covalent attachment of a cholesterol moiety to the C-terminal of the newly generated N-product (By similarity). The N-product is the active species in both local and long-range signaling, whereas the C-product has no signaling activity (By similarity). Cholesterylation is required for N-product targeting to lipid rafts and multimerization. N-palmitoylation by Rasp of the hedgehog N-product, within the secretory pathway, is required for the embryonic and larval patterning activities of the hedgehog signal. RNAi-mediated knockdown severely reduces adult survival following the ingestion of E.carotovora. Abolishes Cad99C-dependent formation of endosomes and DUOX-dependent up-regulation of reactive oxygen species (ROS) in the intestines of adults fed bacteria-derived uracil. Belongs to the hedgehog family.