Sonic Hedgehog (Shh) is a key signaling molecule that plays important roles in various developmental processes in mammals. Although the signal transduction pathway activated by Shh is well understood, the regulation of its secretion remains unclear. Newly synthesized Shh is imported into the endoplasmic reticulum (ER), where it undergoes a series of posttranslational modifications to produce the mature lipid-modified amino-terminal fragment. Here, we have analyzed the molecular mechanisms that mediate secretion of the N-terminal fragment of Shh (ShhN). We found that the Cardin–Weintraub (CW) motif in Shh is necessary and sufficient for ER-to-Golgi transport of ShhN. Mechanistic analyses revealed that a cargo receptor, Surfeit locus protein 4 (SURF4), interacts directly with the CW motif of ShhN to regulate packaging of ShhN into COPII vesicles. ShhN and SURF4 interact with each other at the ER and separate from each other after entering the Golgi. The CW motif is known to interact with proteoglycans (PGs) that are predominantly synthesized at the Golgi. Interestingly, we found that PGs compete with SURF4 to bind ShhN and that inhibiting synthesis of PGs causes defects in export of ShhN from the trans Golgi network (TGN). SURF4 and PG maturation are also important for intracellular traffic of full length Shh in mammalian cells. Our study suggests a SURF4-to-PG relay mechanism that mediates the sorting and secretion of Shh, providing insight into the biosynthetic trafficking of Shh.