The ability of signalling proteins to traverse tissues containing tightly packed cells is of fundamental importance for cell specification and tissue development; however, how this is achieved at a cellular level remains poorly understood. For more than a century, the vertebrate limb bud has served as a model for studying cell signalling during embryonic development. Here we optimize single-cell real-time imaging to delineate the cellular mechanisms for how signalling proteins, such as sonic hedgehog (SHH), that possess membrane-bound covalent lipid modifications traverse long distances within the vertebrate limb bud in vivo. By directly imaging SHH ligand production under native regulatory control in chick (Gallus gallus) embryos, our findings show that SHH is unexpectedly produced in the form of a particle that remains associated with the cell via long cytoplasmic extensions that span several cell diameters. We show that these cellular extensions are a specialized class of actin-based filopodia with novel cytoskeletal features that have not been previously described. Notably, particles containing SHH travel along these extensions with a net anterograde movement within the field of SHH cell signalling. We further show that in SHH-responding cells, specific subsets of SHH co-receptors, including cell adhesion molecule downregulated by oncogenes (CDO) and brother of CDO (BOC), actively distribute and co-localize in specific micro-domains within filopodial extensions, far from the cell body. Stabilized interactions are formed between filopodia containing SHH ligand and those containing co-receptors over a long range. These results suggest that contact-mediated release propagated by specialized filopodia contributes to the delivery of SHH at a distance. Together, these studies identify an important mode of communication between cells that considerably extends our understanding of ligand movement and reception during vertebrate tissue patterning.