Members of the Hedgehog (Hh) family of secreted signaling proteins function as potent short-range organizers in animal development. Their range of action is limited by a C-terminal cholesterol tether and the upregulation of Patched (Ptc) receptor levels. Here we identify a novel segment-polarity gene in Drosophila, dispatched (disp), and demonstrate that its product is required in sending cells for normal Hh function. In the absence of Disp, cholesterol-modified but not cholesterol-free Hh is retained in these cells, indicating that Disp functions to release cholesterol-anchored Hh. Despite their opposite roles, Disp and Ptc share structural homology in the form of a sterol-sensing domain, suggesting that release and sequestration of cholesterol-modified Hh may be based on related molecular pathways.

The function of tubular epithelial organs like the kidney and lung is critically dependent on the length and diameter of their constituting branches. Genetic analysis of tube size control during Drosophila tracheal development has revealed that epithelial septate junction (SJ) components and the dynamic chitinous luminal matrix coordinate tube growth. However, the underlying molecular mechanisms controlling tube expansion so far remained elusive. Here, we present the analysis of two luminal chitin binding proteins with predicted polysaccharide deacetylase activities (ChLDs). ChLDs are required to assemble the cable-like extracellular matrix (ECM) and restrict tracheal tube elongation. Overexpression of native, but not of mutated, ChLD versions also interferes with the structural integrity of the intraluminal ECM and causes aberrant tube elongation. Whereas ChLD mutants have normal SJ structure and function, the luminal deposition of the ChLD requires intact cellular SJs. This identifies a new molecular function for SJs in the apical secretion of ChLD and positions ChLD downstream of the SJs in tube length control. The deposition of the chitin luminal matrix first promotes and coordinates radial tube expansion. We propose that the subsequent structural modification of chitin by chitin binding deacetylases selectively instructs the termination of tube elongation to the underlying epithelium.

The repression of transposable elements in eukaryotes often involves their transcriptional silencing via targeted chromatin modifications. In animal gonads, nuclear Argonaute proteins of the PIWI clade complexed with small guide RNAs (piRNAs) serve as sequence specificity determinants in this process. How binding of nuclear PIWIpiRNA complexes to nascent transcripts orchestrates heterochromatin formation and transcriptional silencing is unknown. Here, we characterize CG9754/Silencio as an essential piRNA pathway factor that is required for Piwimediated transcriptional silencing in Drosophila. Ectopic targeting of Silencio to RNA or DNA is sufficient to elicit silencing independently of Piwi and known piRNA pathway factors. Instead, Silencio requires the H3K9 methyltransferase Eggless/SetDB1 for its silencing ability. In agreement with this, SetDB1, but not Su(var)3-9, is required for Piwi-mediated transcriptional silencing genome-wide. Due to its interaction with the target-engaged PiwipiRNA complex, we suggest that Silencio acts as linker between the sequence specificity factor Piwi and the cellular heterochromatin machinery.[Keywords: H3K9 methylation; Piwi; transposon silencing; heterochromatin formation; piRNA pathway; transcriptional silencing] Supplemental material is available for this article. In fungi, plants, and animals, nuclear Argonaute proteins target nascent transcripts-RNAs that are still attached to their originating DNA locus via the transcribing RNA polymerase. This provides an opportunity for small RNA silencing pathways to connect to the various cellular chromatin-modifying activities for the sequence-specific formation of heterochromatin, typically at transposable element (TE) insertions (Castel and Martienssen 2013).Pioneering work in fission yeast has identified methylation of histone H3 at Lys9 (H3K9me2/3) and histone deacetylation as two major hallmarks that are required for small RNA-guided silencing and heterochromatin formation (Nakayama et al. 2001;Hall et al. 2002;Volpe et al. 2002;Yamada et al. 2005). A sequential order of events downstream from the recruitment of the Schizosaccharomyces pombe Ago1/siRNA complex to nascent RNA of centromeric repeats has been described. According to this, the Ago1/siRNA complex recruits the H3K9 methyltransferase Clr4 to chromatin, which results in H3K9 methylation (Noma et al. 2004;Verdel et al. 2004). This is believed to be a binding platform for the chromodomain-containing protein Swi6/HP1, which in turn recruits the major histone deacetylase and remodeling complex SHREC (Sugiyama et al. 2007). The final outcome of these events is the establishment of a nucleosome-dense region with low histone turnover, which effectively prevents the recruitment of RNA polymerase II (Pol II) to transcription initiation sites and hence transcription as such (e.g., Aygun et al. 2013).H3K9 methylation is also a hallmark of small RNAguided heterochromatin formation in plants, ciliates, and multicellular animals. In animal gonads, many TE insertions are methylated at...