Morphogens exert their effects over long distances, typically by spreading from cell to cell to activate signal transduction in surrounding tissues in concentration-dependent manner. One example of a morphogen is the signaling molecule Hedgehog (Hh), which controls growth and patterning during development and has also been implicated in the progression of numerous cancers. To this end, accessory mechanisms that release, transport, and receive Hhs are required to elicit temporally and spatially specific responses in cells and tissues. The Hh spreading mechanism is especially intriguing, because all Hhs are released from the producing cells despite being synthesized as dually lipidated, membrane-tethered molecules. In addition to this cellular association, Hhs bind strongly to extracellular heparan sulfate proteoglycans (HSPGs), which is expected to further reduce their spreading. Paradoxically, several lines of evidence suggest that Hh gradient formation actually requires HSPG expression, and that HSPGs act as both positive and negative regulators of Hh function. This article reviews the multiple roles that HSPGs play in Hh morphogen function, and discusses their congruity with proposed mechanisms of Hh solubilization, transport, and signal reception in vertebrate and invertebrate tissues.