We present here evidence of in vivo epithelial endocytosis and trafficking of non-lipid-modified Sonic hedgehog (ShhN) when infused into rat efferent ducts via microinjection. Initially, exogenous ShhN is detected in endocytic vesicles and early endosomes located near the apical plasma membrane of non-ciliated cells. Within 30-60 min following infusion, ShhN can be detected in lysosomes and at basolateral regions of non-ciliated cells. Basolaterally, ShhN was observed along the extracellular surfaces of interdigitated plasma membranes of adjacent cells and in the extracellular compartment underlying the efferent duct epithelium. Uptake and subcellular trafficking of infused ShhN by non-ciliated cells could be blocked by either anti-megalin IgG or the megalin antagonist, RAP. Ciliated cells, which do not express megalin, displayed little if any apical internalization of ShhN even though they were found to express Patched-1. However, ShhN was found in coated pits of lateral plasma membranes of ciliated cells as well as in underlying endocytic vesicles. We conclude that megalin-mediated endocytosis of ShhN can occur in megalin-expressing epithelia in vivo, and that the internalized ShhN can be targeted to the lysosome or transcytosed in the plane of the epithelium or across the epithelium. These findings highlight the multiple mechanisms by which megalin may influence Shh morphogen gradients in vivo.