The proteins of the Hedgehog (Hh) family are secreted proteins exerting short- and long-range control over various cell fates in developmental patterning. The Hh gradient in Drosophila wing imaginal discs consists of apical and basolateral secreted pools, but the mechanisms governing the overall establishment of the gradient remain unclear. We investigated the relative contributions of endocytosis and recycling to control the Hh gradient. We show that, upon its initial apical secretion, Hh is re-internalized. We examined the effect of the resistance-nodulation-division transporter Dispatched (Disp) on long-range Hh signaling and unexpectedly found that Disp is specifically required for apical endocytosis of Hh. Re-internalized Hh is then regulated in a Rab5- and Rab4-dependent manner to ensure its long-range activity. We propose that Hh-producing cells integrate endocytosis and recycling as two instrumental mechanisms contributing to regulate the long-range activity of Hh.