Dally is not essential for Dpp spreading or internalization but for Dpp stability by antagonizing Tkv-mediated Dpp internalization

Abstract Dpp/BMP acts as a morphogen to provide positional information in the Drosophila wing disc. Key cell-surface molecules to control Dpp morphogen gradient and signaling are heparan sulfate proteoglycans (HSPGs). In the wing discs, two HSPGs, the glypicans Division abnormally delayed (Dally) and Dally-like (Dlp) have been suggested to act redundantly to control these processes through direct interaction of their heparan sulfate (HS) chains with Dpp. Based on this assumption, a number of models on how glypicans control Dpp gradient formation and signaling have been proposed, including facilitating or hindering Dpp spreading, stabilizing Dpp on the cell surface, or recycling Dpp. However, how distinct HSPGs act remains largely unknown. Here we generate genome-engineering platforms for the two HSPGs and find that only Dally is critical for Dpp gradient formation and signaling through interaction of its core protein with Dpp. Nevertheless, we find that this interaction is not sufficient, and that the HS chains of Dally are essential for Dpp gradient formation and signaling largely without interacting with Dpp. We provide evidence that the HS chains of Dally are not essential for spreading or recycling of Dpp but for stabilizing Dpp on the cell surface by antagonizing Dpp internalization through Tkv. These results provide new insights into how distinct HSPGs control morphogen gradient formation and signaling during development.