Dev112904 931..942

The Drosophila kinesin-family protein Costal 2 (Cos2) and its mammalian ortholog Kif7 play dual roles in Hedgehog (Hh) signaling. In theabsenceofHh,Cos2andKif7 contribute toproteolytic processing and silencing of the Hh-regulated transcription factors, Drosophila Cubitus interruptus (Ci) andmammalianGli proteins. Cos2 andKif7 are also necessary for full activation of full-length Ci-155 and Gli transcription factors in response to Hh proteins. Here, we use classical fused alleles and transgenic Cos2 products deficient for Fused (Fu) association to show that Cos2 must bind to Fu to support efficient Ci-155 processing. Residual Ci-155processing in the absence of Cos2-Fu interaction did not require Suppressor of Fused, which has been implicated inprocessingmammalianGli proteins.Wealsoprovide evidence that Cos2 binding to the CORD domain of Ci-155 contributes to bothCi-155 processing andCi-155 silencing in the absence ofHh. In the presence of Hh, Ci-155 processing is blocked and Cos2 now promotes activation of Ci-155, which requires Fu kinase activity. Here, we show that normal Ci-155 activation by Hh requires Cos2 binding to Fu, supporting the hypothesis that Cos2 mediates the apposition of Fu molecules suitable for cross-phosphorylation and consequent full activation of Fu kinase. We also find that phosphorylation of Cos2 by Fu at two previouslymapped sites, S572 and S931, which is thought to mediateCi-155activation, is not required for normal activationofCi-155 by Hh or by activated Fu.