Signaling through the Hedgehog (Hh) pathway is mediated by the Patched (Ptch) family of proteins. Although the vertebrate Ptch proteins Ptch1 and Ptch2 harbor two closely related transmembrane modules related to sterol-sensing domains (SSDs)， the role of these closely related receptors in the Hh pathway are not equivalent. Ptch1 is essential for development and appears to be the principal receptor mediating responses to Hh ligands， whereas Ptch2 is nonessential， and its role in Hh-signaling remains ambiguous. We hypothesized that the SSDs of the Ptch proteins function as generic modules whose protein-specific activities are determined by the adjacent cytoplasmic and luminal domains. We first showed that individual N-terminal and C-terminal halves of Ptch1 associated noncovalently to mediate ligand-dependent regulation of Hh signaling. The analogous regions of Ptch2 also interacted noncovalently but did not repress the Hh pathway. However， the SSD of Ptch2 were capable of repressing Hh signaling， as determined using chimeric proteins where the SSDs of Ptch1 were replaced by those from Ptch2. Replacement of the SSDs of Ptch1 with the analogous regions from the cholesterol transporter NPC1 failed to produce a chimeric protein capable of Hh repression. Further refinement of the specific regions in Ptch1 and Ptch2 revealed that specific cytoplasmic domains of Ptch1 were necessary but not sufficient for repression of Hh signaling and that the two principal luminal domains of Ptch1 and Ptch2 were interchangeable. These data support a model where the SSDs of the Ptch family proteins exhibit generic activities and that the adjacent cytoplasmic and luminal domains determine their protein-specific activities.