Encapsulation of prespore cells of Dictyostelium discoideum is controlled by several intercellular signals to ensure appropriate timing during fruiting body formation. Acyl-CoA-binding protein, AcbA, is secreted by prespore cells and processed by the prestalk protease TagC to form the 34 amino acid peptide SDF-2 that triggers rapid encapsulation. AcbA is secreted when gamma-aminobutyric acid (GABA) is released from prespore cells and binds to GrlE, a G protein-coupled receptor (GPCR). Analysis of SDF-2 production in mutant strains lacking Galpha subunits and GPCRs, either as pure populations or when mixed with other mutant strains, uncovered the non-cell-autonomous roles of GrlA, Galpha4 and Galpha7. We found that Galpha7 is essential for the response to GABA and is likely to be coupled to GrlE. GrlA-null and Galpha4-null cells respond normally to GABA but fail to secrete it. We found that they are necessary for the response to a small hydrophobic molecule, SDF-3, which is released late in culmination. Pharmacological inhibition of steroidogenesis during development blocked the production of SDF-3. Moreover, the response to SDF-3 could be blocked by the steroid antagonist mifepristone, whereas hydrocortisone and other steroids mimicked the effects of SDF-3 when added in the nanomolar range. It appears that SDF-3 is a steroid that elicits rapid release of GABA by acting through the GPCR GrlA, coupled to G protein containing the Galpha4 subunit. SDF-3 is at the head of the cascade that amplifies the signal for encapsulation to ensure the rapid, synchronous formation of spores.