Hedgehog (Hh) and Wingless (Wg) morphogens specify cell fate in a concentration-dependent manner in the Drosophila wing imaginal disc. Proteoglycans, components of the extracellular matrix, are involved in Hh and Wg stability, spreading, and reception. In this study, we demonstrate that the glycosyl-phosphatidyl-inositol (GPI) anchor of the glypican Dally-like (Dlp) is required for its apical internalization and its subsequent targeting to the basolateral compartment of the epithelium. Dlp endocytosis from the apical surface of Hh-receiving cells catalyzes the internalization of Hh bound to its receptor Patched (Ptc). The cointernalization of Dlp with the Hh/Ptc complex is dynamin dependent and necessary for full-strength Hh signaling. We also demonstrate that Wg is secreted apically in the disc epithelium and that apicobasal trafficking of Dlp allows Wg transcytosis to favor Wg spreading along the basolateral compartment. Thus, Dlp endocytosis is a common regulatory mechanism of both Hh and Wg morphogen action.