Sonic hedgehog (Shh) was previously shown to be involved in the larval-to-adult remodeling of the Xenopus laevis intestine. While Shh is transcriptionally regulated by thyroid hormone (TH), the posttranscriptional regulation of Shh signaling during intestinal remodeling is largely unknown. In the present study, we focused on a role of the pan-hedgehog inhibitor, hedgehog interacting protein (Hip), in the spatiotemporal regulation of Shh signaling. Using real-time reverse transcriptase-polymerase chain reaction and in situ hybridization, we show that Hip expression is transiently up-regulated during both natural and TH-induced metamorphosis and that Hip mRNA is localized in the connective tissue adjacent to the adult epithelial primordia expressing Shh. Interestingly, the expression of bone morphogenetic protein-4, a Shh target gene, is hardly detectable where Hip is strongly expressed. Finally, we demonstrate that Hip binds to the N-terminal fragment of processed Shh in vivo, suggesting that Hip suppresses Shh signaling through sequestering Shh. Developmental Dynamics 237:3006–3015, 2008. © 2008 Wiley-Liss, Inc.