Recessive mutations of the Drosophila gene lethal(2)-tumorous imaginal discs (l(2)tid) cause neoplastic growth of the anlagen of the adult organs, the imaginal discs. Here we report that the three proteins encoded by this evolutionarily conserved gene, Tid50, Tid47, and Tid40, identified as members of the DnaJ cochaperone family, are destined for different cellular compartments, build complexes with many proteins in a developmental stage-specific manner, and are likely to be involved in different cellular processes. We show that the cytosolic Tid47 molecule is a novel component of the Hedgehog (Hh)-Patched (Ptc) signaling regulating cell/tissue polarity and spatial patterning during development and is associated with human tumors such as basal cell carcinoma (BCC) and medulloblastoma. We provide functional evidence for its direct in vivo interaction with the Hh-bound Ptc receptor during signal transmission. Because loss of l(2)tid causes neoplastic transformation of Hh-responsive cells, we suggest that Tid47 may at least act as a guardian of the Hh signaling gradient by regulating Ptc homeostasis in the tissue. Finally, we show that the expression of htid-1, the human counterpart of l(2)tid, is altered in human BCCs. We demonstrate that in BCCs loss of htid expression correlates with loss of differentiation capacity of the neoplastic cells similar to that found in the Drosophila tumor model.