Gpc5 is the core protein that affects heparan sulfate proteoglycan-mediated Sonic Hedgehog (Shh) distribution and response in neuralized embryoid bodies (nEBs). (A, B): nEBs derived from mouse embryonic stem cell lines with the indicated composition and genotype. Extracellular Shh distribution was assayed by live staining after 4 days. Mosaic nEBs consisting either 98% Shh−/−;Ptch1+/LacZ (A) or Shh−/−;Ptch1+/LacZ;Gpc5−/− (B) and 2% Shh-expressing cells were stained for extracellular Shh. (C): Area of Shh positive per nEB was quantified. One-way analysis of variance with post hoc Dunnett’s test; ****, p < .0001. (D–L): Mosaic nEBs consisting either of only Shh−/−;Ptch1+/LacZ (D, I) or Shh−/−;Ptch1+/LacZ;Gpc5−/− (F, K) or incorporated 1% Shh-expressing cells (E, G, J, L) were stained for Olig2 (D–G) and Isl1/2 (I–L). (H): Quantification of (D)–(G). (M): Quantification of (I)–(K). Student’s t test; ***, p < .001. (N): A Gpc5 transgene was stably expressed in Shh−/−;Ptch1+/LacZ;Gpc5−/− cells. These cells were assessed for their ability to affect the Shh response in mosaic nEBs incorporating 2% Shh-expressing cells as compared with the maternal line. The expression of Olig2 and Isl1/2 positive cells per nEB was quantified. Student’s t test; **, p < .01; ****, p < .0001. Scale bar is 100 μm. Abbreviation: ns, not significant.