In the absence of a Hedgehog signal, the transcription factor Gli is phosphorylated, ubiquitylated and then proteolyzed to a truncated form that has dominant-negative activity. Hedgehog pathway activation somehow blocks Gli proteolysis, resulting in the accumulation of full-length Gli and activation of target gene transcription. How are the vertebrate Gli's proteolyzed in the resting state of th Hedgehog pathway? How does Hedgehog signaling block Gli proteolysis? We are using biochemical reconstitution and cell biology to answer these questions. We are also using live cell imaging to understand the spatial and temporal aspects of Gli proteolysis in both the resting and the stimulated states of the Hedgehog pathway.