Palmitoylation of the EGFR ligand Spitz by Rasp increases Spitz activity by restricting its diffusion.

Lipid modifications such as palmitoylation or myristoylation target intracellular proteins to cell membranes. Secreted ligands of the Hedgehog and Wnt families are also palmitoylated; this modification, which requires the related transmembrane acyltransferases Rasp and Porcupine, can enhance their secretion, transport, or activity. We show here that rasp is also essential for the developmental functions of Spitz, a ligand for the Drosophila epidermal growth factor receptor (EGFR). In cultured cells, Rasp promotes palmitate addition to the N-terminal cysteine residue of Spitz, and this cysteine is required for Spitz activity in vivo. Palmitoylation reduces Spitz secretion and enhances its plasma membrane association, but does not alter its ability to activate the EGFR in vitro. In vivo, overexpressed unpalmitoylated Spitz has an increased range of action but reduced activity. These data suggest a role for palmitoylation in restricting Spitz diffusion, allowing its local concentration to reach the threshold required for biological function.