Sonic hedgehog (Shh) encodes a signal that is implicated in both short- and long-range interactions that pattern the vertebrate central nervous system (CNS), somite and limb. Studies in vitro indicate that Shh protein undergoes an internal cleavage to generate two secreted peptides. We have investigated the distribution of Shh peptides with respect to these patterning events using peptide-specific antibodies. Immunostaining of chick and mouse embryos indicates that Shh peptides are expressed in the notochord, floor plate and posterior mesenchyme of the limb at the appropriate times for their postulated patterning functions. The amino peptide that is implicated in intercellular signaling is secreted but remains tightly associated with expressing cells. The distribution of peptides in the ventral CNS is polarized with the highest levels of protein accumulating towards the luminal surface. Interestingly, Shh expression extends beyond the floor plate, into ventrolateral regions from which some motor neuron precursors are emerging. In the limb bud, peptides are restricted to a small region of posterior-distal mesenchyme in close association with the apical ectodermal ridge; a region that extends 50-75 microns along the anterior-posterior axis. Temporal expression of Shh peptides is consistent with induction of sclerotome in somites and floor plate and motor neurons in the CNS, as well as the regulation of anterior-posterior polarity in the limb. However, we can find no direct evidence for long-range diffusion of the 19 x 10(3) Mr peptide which is thought to mediate both short- and long-range cell interactions. Thus, either long-range signaling is mediated indirectly by the activation of other signals, or alternatively the low levels of diffusing peptide are undetectable using available techniques.