A leading hypothesis in the field is that Patched regulates Smoothened by regulating access to
cholesterol or a related substance. It has been proposed that cholesterol activates Smo, and subsequently Hh signaling, by entering the active site through a hydrophobic "oxysterol tunnel," which can adopt open or closed conformations to allow for activation or inactivation of Smo, respectively, due to allowed sterol binding. Shh would work by inhibiting Ptc, which would increase accessible cholesterol concentrations and allow for the activation of Smo and transmission of the Hh signal. A recent crystal structure has identified two sterol binding sites in Smo, but which site is endogenously regulated by Ptc remains to be determined. The potential sites of regulation include the extracellular cysteine-rich domain (CRD) of Smo, as well as a site deep within the transmembrane domain (TMD). Due to the abundance of cholesterol in the plasma membrane (up to 50 mole %), it has also been proposed that Ptc regulates the activity of Smo by controlling cholesterol accessibility specifically within the membrane of the
primary cilia, which contains a less abundant, and therefore more readily regulated pool of accessible cholesterol. Typically, upon activation and release of inhibition by Ptc, Smo will relocate to the primary cilia and Ptc will diffuse out of the ciliary membrane. Upon inactivation, Smo no longer becomes concentrated in the ciliary membrane, This hypothesis is supported by methods which can increase or deplete the accessible cholesterol pool, with a subsequent increase or decrease in Hh signaling. This accessible cholesterol pool has been shown to be distinct from the general plasma membrane cholesterol pool in being available for protein interaction and cell uptake. The ciliary membrane has also been shown to contain lower levels of accessible cholesterol due to sequestering of cholesterol by
sphingomyelin. In addition to cholesterol's role as a Hh pathway agonist, it has been shown that cholesterol levels within the ciliary membrane rapidly increase upon treatment with Shh only in the presence of Ptc, further suggesting Ptc regulation of accessible cholesterol as the mechanism behind Smo activation/inhibition. This suggests the hypothesis that Ptc functions by preventing Smo access to cholesterol, and upon Ptc inhibition by Shh, Smo gains access to cholesterol and is subsequently activated, transmitting the Hh signal. ==Role in disease==