Sonic hedgehog (SHH) is considered to play an important role in tissue induction and patterning during development, particularly in determining neuronal cell fate in the ventral neural tube and in the embryonic forebrain. SHH precursor is autoproteolytically cleaved to an aminoterminal fragment (SHHN) which retains all known SHH biological activities. Here, we demonstrate the expression of a 22-kDa SHHN immunoreactive peptide in developing and adult hamster brain regions using a rabbit antiserum directed against a mouse SHHN fragment. Interestingly, SHHN was developmentally regulated with the highest expression observed in the adult brain, was resistant to Triton X-100 solubilization at 4 °C and partitioned with the raft component ganglioside GM1 during density gradient centrifugation. In rat brain, Shh transcripts were identified by double in situ hybridization in GABAergic neurons located in various basal forebrain nuclei including globus pallidus, ventral pallidum, medial septum-diagonal band complex, magnocellular preoptic nucleus and in cerebellar Purkinje cells as well as in motoneurons of several cranial nerve nuclei and of the spinal cord. We show that radiolabelled SHHN peptides are synthesized in the adult hamster retina and are transported axonally along the optic nerve to the superior colliculus in vivo. Our data indicate that SHHN is associated with cholesterol rich raft-like microdomains and anterogradely transported in the adult brain, and suggest that the roles of this extracellular protein are more diverse than originally thought.