In developing limbs, numerous signaling molecules have been identified but less is known about the mechanisms by which such signals direct patterning. We have explored signal transduction pathways in the chicken limb bud. A cDNA encoding RACK1, a protein that binds and stabilizes activated protein kinase C (PKC), was isolated in a screen for genes induced by retinoic acid (RA) in the chick wing bud. Fibroblast growth factor (FGF) also induced RACK1 and such induction of RACK1 expression was accompanied by a significant augmentation in the number of active PKC molecules and an elevation of PKC enzymatic activity. This suggests that PKCs mediate signal transduction in the limb bud. Application of chelerythrine, a potent PKC inhibitor, to the presumptive wing region resulted in buds that did not express sonic hedgehog (Shh) and developed into wings that were severely truncated. This observation suggests that the expression of Shh depends on PKCs. Providing ectopic SHH protein, RA or ZPA grafts overcome the effects of blocking PKC with chelerythrine and resulted in a rescue of the wing morphology. Taken together, these findings suggest that the responsiveness of Shh to FGF is mediated, at least in part, by PKCs.