Fig. 8. Differential gene regulation by Hedgehog (Hh). Hh protein, secreted from posterior compartment cells (green), is distributed as a protein gradient in anterior compartment cells, with the highest concentration of Hh occurring at the AP boundary (black line). Cells receiving minimal amounts of Hh respond by inactivating the ATPase activity of Cos2 (red domain), perhaps by Fu-dependent phosphorylation (Nybakken et al., 2002) or other event. This results in the activation of dpp transcription in cells as far as 15 cell diameters away from the Hh source (red nuclei - only eight cells shown for sake of brevity). Cells receiving an intermediate amount of Hh inactivate Su(fu) (purple domain), perhaps by phosphorylation, which results in the activation of ptc (purple nuclei) in addition to the activation of dpp. ptc is expressed in a swath of cells 8-10 cell diameters in width (only five cells shown). Anterior en transcription in a 5- to 7-cell-wide stripe is Hh dependent and is located closest to the AP boundary (only one cell shown, labeled En). Posterior En protein (En) is also present but its expression is not Hh dependent. In the anterior, both dpp and ptc transcription are repressed by en (Sanicola et al., 1995), so lower amount of dpp transcription is seen in a 1- to 5-cell-wide stripe at the AP border in en-expressing cells (white nucleus of anterior cell labeled En).