The physiological response to environmental cues involves complex interorgan communication via endocrine factors and hormones, but the underlying mechanisms are poorly understood. In particular, little is known about how animals coordinate systemic growth and developmental timing in response to environmental changes. The morphogen Hedgehog (Hh), which is well studied in tissue patterning and homeostasis, has only recently been implicated in the regulation of lipid and sugar metabolism. Interestingly, Hh is present in systemic circulation in both, ies and mammals. Here, we demonstrate that systemic Hh is produced in the midgut and secreted in association with the lipoprotein particle lipophorin (Lpp) into the hemolymph to mediate the interorgan communication between the midgut and two tissues, the fat body and the prothoracic gland (PG). We show that midgut hh expression is regulated by dietary sugar and amino acid levels, and RNAi-mediated knock-down of circulating Hh leads to starvation sensitivity. We demonstrate that circulating Hh is required to inhibit systemic growth and developmental progression. In insects, developmental transitions are regulated by steroid hormones, which are produced by the PG. Nutritional regulation of growth is, in part, mediated by the Drosophila fat body. Strikingly, canonical Hh pathway components are present in both tissues, the fat body and the PG. To understand the Hh-mediated function during nutritional stress, we ectopically activated or inhibited the Hh signaling pathway specifically in the fat body and the PG. Our results show that systemic Hh exerts its function through these two target tissues. Hh signaling in the fat body is required for survival during periods of nutrient deprivation, and ectopic activation of fat body Hh signaling causes an inhibition of systemic growth. Hh signaling in the PG slows down developmental progression by inhibiting steroid hormone biosynthesis. In conclusion, we propose that the midgut senses the uptake of dietary sugar and amino acids and secrets Hh in association with Lpp particles into circulation to relay information about the feeding status to the developing animal. Therefore, circulating Hh functions as a hormone and signals in an endocrine manner to the fat body and the prothoracic gland to coordinate systemic growth and developmental timing in response to changes in nutrient availability.