The ability of signaling proteins to traverse tissues containing tightly packed cells is of fundamental importance for cell specification and tissue development, however, how this is achieved at a cellular level remains poorly understood 1 . For over a century, the vertebrate limb bud has served as a paradigm to study cell signaling during embryonic development 2 . Here we optimize single cell real-time imaging to delineate the cellular mechanisms for how signaling proteins, such as Sonic Hedgehog (Shh), that possess membrane-bound covalent lipid modifications transverse long distances within the limb bud in vivo. By directly imaging Shh ligand production under native regulatory control, our findings show that Shh is unexpectedly produced in the form of a particle that remains associated with the cell via long cytoplasmic extensions that span several cell diameters. We show that these cellular extensions are a specialized class of actin-based filopodia with novel cytoskeletal features that have not been previously described. Strikingly, particles containing Shh traffic along these extensions with a net anterograde movement within the field of Shh cell signaling. We further show that in Shh responding cells specific subsets of Shh co-receptors, including Cdo and Boc, actively distribute and co-localize in specific micro-domains within filopodial extensions, far from the cell body. Stabilized interactions are formed between filopodia containing Shh ligand and those containing co-receptors over a long-range. These results suggest that contact-mediated release propagated by specialized filopodia contributes to the delivery of Shh at a distance. Together, these studies identify an important mode of communication between cells that significantly extends our understanding of ligand movement and reception during vertebrate tissue patterning.