Sonic hedgehog (Shh) is a signaling molecule that is important for defining patterning in the developing vertebrate central nervous system. After translation, Shh autoproteolyzes and covalently attaches cholesterol to the newly formed carboxyl terminus, a modification crucial for normal Shh signaling. Presented here is evidence that acute severe sterol deprivation in cultured Chinese hamster ovary cells expressing mouse Shh (mShh) inhibits autoprocessing of the protein. These conditions allowed the first detailed kinetic analysis of mShh autoprocessing and turnover rates revealing that cells rapidly degrade both precursor and mature mShh regardless of sterol content and sterol deprivation increases the rate of precursor degradation. Inhibition of mShh autoprocessing also allowed the determination of the subcellular localization of mShh precursor which accumulates in a pre-medial Golgi intracellular compartment. Finally, the precursor form of mShh that results from autoprocessing inhibition appears to accumulate as an amide rather than a stable thioester.