The membrane protein Patched (Ptc) is a critical regulator of Hedgehog signaling. Ptc is among a family of proteins that contain a sterol sensor motif. The function of this domain is poorly understood, but some proteins that contain sterol sensors are involved in cholesterol homeostasis. In the SREBP cleavage-activating protein (SCAP), sterols inhibit the protein's activity through this domain. Mutations in two highly conserved residues in the SCAP sterol sensor have been identified that confer resistance to sterol regulation. We introduced the analogous mutations in the sterol sensor motif of fly Ptc and mouse Ptc1 and examined their effect on protein activity. In contrast to SCAP, the sterol sensor mutations had different affects on Drosophila Ptc; Ptc Y442C retained function, while Ptc D584N conferred dominant negative activity. In the wing imaginal disc, Ptc D584N overexpression induced Hedgehog targets by stabilizing Cubitus interruptus and inducing decapentaplegic. However, Ptc D584N did not induce collier, a gene that requires high levels of Hedgehog signaling. In mouse Ptc1, the Y438C and D585N mutations did not stimulate signaling in Shh-responsive cell lines but did complement murine ptc1^−/− cells. The results suggest that mutations in sterol sensor motifs alter function differently between sterol sensor family members.