We have examined the respective contribution of Heparan Sulfate Proteoglycans (HSPGs) and Frizzled (Fz) proteins in the establishment of the Wingless (Wg) morphogen gradient. From the analysis of mutant clones of sulfateless/N-deacetylase-sulphotransferase in the wing imaginal disc, we find that lack of Heparan Sulfate (HS) causes a dramatic reduction of both extracellular and intracellular Wg in receiving cells. Our studies, together with others [Kirkpatrick, C.A., Dimitroff, B.D., Rawson, J.M., Selleck, S.B., 2004. Spatial regulation of Wingless morphogen distribution and signalling by Dally-like protein. Dev. Cell (in press)], reveals that the Glypican molecule Dally-like Protein (Dlp) is associated with both negative and positive roles in Wg short- and long-range signaling, respectively. In addition, analyses of the two Fz proteins indicate that the Fz and DFz2 receptors, in addition to transducing the signal, modulate the slope of the Wg gradient by regulating the amount of extracellular Wg. Taken together, our analysis illustrates how the coordinated activities of HSPGs and Fz/DFz2 shape the Wg morphogen gradient.