Three recent studies identify mechanisms by which a Hedgehog (HH) gradient can finely tune downstream signalling. HH binding to its receptor leads to the phosphorylation of the transmembrane protein Smoothened (SMO). Li et al. observed that in Drosophila melanogaster the cell surface levels of SMO are downregulated through ubiquitin-mediated endocytosis and degradation. Its phosphorylation in the presence of HH prevents the ubiquitylation of SMO, leading to its stabilization on the plasma membrane. Interestingly, Ranieri et al. report that the extent of SMO activation by phosphorylation (which reflects the levels of extracellular HH) can influence the downstream transcriptional activity through differential phosphorylation of Costal 2 (COS2) by the kinase Fused; low-magnitude SMO activation results in COS2 phosphorylation at Ser572, whereas high-magnitude SMO activation induces COS2 phosphorylation at both Ser572 and Ser931. Futhermore, COS2 phosphorylated at Ser931 localizes to the plasma membrane, where it forms a stable complex with SMO and Fused, and promotes nuclear translocation and transcriptional activity of Cubitus Interruptus. Finally, with the use of reporter mice Balaskas et al. observed that the activity of Gli transcription factors (which are directly activated by HH signalling) in the embryonic neural tube decreases after embryonic day 8.5–9 despite the presence of a HH gradient. Thus, the dynamics of Gli activity may differ from the dynamics of the HH extracellular gradient. Moreover, in silico and in vivo studies revealed that the gene expression pattern of mouse neural progenitor cells is not determined by Gli activity but by a network of mutually regulated transcription factors, including NKX2.2, OLIG2 and PAX6. The authors suggest that this gene regulatory network ensures that the fate of neural progenitor cells is determined by both the level and the duration of HH signalling and Gli activity and, thus, cannot be affected by transient morphogen fluctuations.