Hedgehog (Hh) is a secreted morphogen involved in both short- and long-range signaling necessary for tissue patterning during development. It is unclear how this dually lipidated protein is transported over a long range in the aqueous milieu of interstitial spaces. We previously showed that the long-range signaling of Hh requires its oligomerization. Here we show that Hh is secreted in the form of exovesicles. These are derived by the endocytic delivery of cell surface Hh to multivesicular bodies (MVBs) via an endosomal sorting complex required for transport (ECSRT)-dependent process. Perturbations of ESCRT proteins have a selective effect on long-range Hh signaling in Drosophila wing imaginal discs. Of importance, oligomerization-defective Hh is inefficiently incorporated into exovesicles due to its poor endocytic delivery to MVBs. These results provide evidence that nanoscale organization of Hh regulates the secretion of Hh on ESCRT-derived exovesicles, which in turn act as a vehicle for long-range signaling.,© 2015 Parchure et al. This article is distributed by The American Society for Cell Biology under license from the author(s). Two months after publication it is available to the public under an Attribution–Noncommercial–Share Alike 3.0 Unported Creative Commons License (http://creativecommons.org/licenses/by-nc-sa/3.0).