During embryonic development, cells communicate with each other to cooperate to form organized tissues. Cells spatiotemporally coordinate with each other by communicating with signaling proteins such as Fibroblast Growth Factor (FGF) that travel from source to target cells to activate various functions. To better understand cell communication during tissue morphogenesis, this study aimed to address a fundamental question: how different cellular and molecular mechanisms in signal-producing cells prepare and release signals at the correct time and location and at an appropriate level. This research focuses on the intercellular communication of the Drosophila FGF Branchless (Bnl) to elucidate this question. Bnl is dynamically produced in restricted groups of cells to induce morphogenesis of tracheal airway epithelial tubes. Tracheal cells receive the signal over distance by extending long receptor-containing filopodia, or cytonemes, to dynamically contact the Bnl-source. This work discovered two post-translational modifications of Bnl that regulate its polarized intracellular trafficking and cytoneme-mediated intercellular dispersal. During intracellular trafficking through the source cell Golgi network, Bnl is endo-proteolytically cleaved at a single site by the protease Furin-1. This cleavage activates polarized intracellular trafficking of the truncated signal exclusively to the surface of the source cells that faces the recipient tracheal cells. Thus, the intracellular cleavage acts as a switch to catalyze the efficient trafficking of the signal to the correct location from where cytonemes can subsequently receive it. Secondly, in the endoplasmic reticulum of source cells, Bnl is modified with a glycosylphosphatidylinositol (GPI) moiety at its C-terminus. This lipid moiety tethers Bnl molecules to the outer leaflet of the cell membrane, inhibiting its free release and ensuring signal exchange solely by direct physical contacts established by cytonemes. Therefore, this study discovered how Bnl is prepared by the source cells to ensure its subsequent target-specific intercellular dispersion through cytonemes. Conserved FGF family proteins are essential for regulating a broad spectrum of biological functions and defects in spatiotemporal levels of FGF signaling leads to severe diseases. Given the conservation of developmental signaling mechanisms in all organisms, the discovery of new regulatory mechanisms of FGF signaling has fundamental implications for understanding development and disease in humans.