The two glypicans Dally and Dally-like have been implicated in modulating the activity of Wingless, a member of the Wnt family of secreted glycoprotein. So far, the lack of null mutants has prevented a rigorous assessment of their roles. We have created a small deletion in the two loci. Our analysis of single and double mutant embryos suggests that both glypicans participate in normal Wingless function, although embryos lacking maternal and zygotic activity of both genes are still capable of transducing the signal from overexpressed Wingless. Genetic analysis of dally-like in wing imaginal discs leads us to a model whereby, at the surface of any given cell of the epithelium, Dally-like captures Wingless but instead of presenting it to signalling receptors expressed in this cell, it passes it on to neighbouring cells, either for paracrine signalling or for further transport. In the absence of dally-like, short-range signalling is increased at the expense of long-range signalling (reported by the expression of the target gene distalless) while the reverse is caused by Dally-like overexpression. Thus, Dally-like act as a gatekeeper, ensuring the sharing of Wingless among cells along the dorsoventral axis. Our analysis suggests that the other glypican, Dally, could act as a classical co-receptor.