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Decapentaplegic (Dpp), a Drosophila morphogen signaling protein, transfers directly at synapses made at sites of contact between cells that produce Dpp and cytonemes that extend from recipient cells. The Dpp that cytonemes receive moves together with activated receptors toward the recipient cell body in motile puncta. Genetic loss-of-function conditions for diaphanous, shibire, neuroglian, and capricious perturbed cytonemes by reducing their number or only the synapses they make with cells they target, and reduced cytoneme-mediated transport of Dpp and Dpp signaling. These experiments provide direct evidence that cells use cytonemes to exchange signaling proteins, that cytoneme-based exchange is essential for signaling and normal development, and that morphogen distribution and signaling can be contact-dependent, requiring cytoneme synapses.