The Hedgehog (Hh) morphogenetic gradient controls multiple developmental patterning events in Drosophila and vertebrates. Patched (Ptc), the Hh receptor, restrains both Hh spreading and Hh signaling. We report how endocytosis regulates the concentration and activity of Hh in the wing imaginal disc. Our studies show that Ptc limits the Hh gradient by internalizing Hh through endosomes in a dynamin-dependent manner, and that both Hh and Ptc are targeted to lysosomal degradation. We also found that the ptc(14) mutant does not block Hh spreading, as it has a failure in endocytosis. However, this mutant protein is able to control the expression of Hh target genes as the wild-type protein, indicating that the internalization mediated by Ptc is not required for signal transduction. In addition, we noted that both in this mutant and in those not producing Ptc protein, Hh still occurred in the endocytic vesicles of Hh-receiving cells, suggesting the existence of a second, Ptc-independent, mechanism of Hh internalization.