The dispatched (disp) gene is required for long-range Hedgehog (Hh) signaling in Drosophila. Here, we demonstrate that one of two murine homologs, mDispA, can rescue disp function in Drosophila and is essential for all Hh patterning activities examined in the early mouse embryo. Embryonic fibroblasts lacking mDispA respond normally to exogenously provided Sonic hedgehog (Shh) signal, but are impaired in stimulation of other responding cells when expressing Shh. We have developed a biochemical assay that directly measures the activity of Disp proteins in release of soluble Hh proteins. This activity is disrupted by alteration of residues functionally conserved in Patched and in a related family of bacterial transmembrane transporters, thus suggesting similar mechanisms of action for all of these proteins.