Sonic Hedgehog (Shh) is a representative of the evolutionary closely related class of Hedgehog proteins that have essential signaling functions in animal development. The N-terminal domain (ShhN) is also assigned to the group of LAS proteins (LAS = Lysostaphin type enzymes, D-Ala-D-Ala metalloproteases, Sonic Hedgehog), of which all members harbor a structurally well-defined Zn2+ center; however, it is remarkable that ShhN so far is the only LAS member without proven peptidase activity. Another unique feature of ShhN in the LAS group is a double-Ca2+ center close to the zinc. We have studied the effect of these calcium ions on ShhN structure, dynamics, and interactions. We find that the presence of calcium has a marked impact on ShhN properties, with the two calcium ions having different effects. The more strongly bound calcium ion significantly stabilizes the overall structure. Surprisingly, the binding of the second calcium ion switches the putative catalytic center from a state similar to LAS enzymes to a state that probably is catalytically inactive. We describe in detail the mechanics of the switch, including the effect on substrate co-ordinating residues and on the putative catalytic water molecule. The properties of the putative substrate binding site suggest that ShhN could degrade other ShhN molecules, e.g. by cleavage at highly conserved glycines in ShhN. To test experimentally the stability of ShhN against autodegradation, we compare two ShhN mutants in vitro: (1) a ShhN mutant unable to bind calcium but with putative catalytic center intact, and thus, according to our hypothesis, a constitutively active peptidase, and (2) a mutant carrying additionally mutation E177A, i.e., with the putative catalytically active residue knocked out. The in vitro results are consistent with ShhN being a cannibalistic zinc-peptidase. These experiments also reveal that the peptidase activity depends on pH.