During development of the Drosophila wing, the decapentaplegic (dpp) gene is expressed in a stripe of cells along the anteroposterior compartment boundary and gives rise to a secreted protein that exerts a long-range organizing influence on both compartments. Using clones of cells that express DPP, or in which DPP receptor activity has been constitutively activated or abolished, we show that DPP acts directly and at long range on responding cells, rather than by proxy through the short-range induction of other signaling molecules. Further, we show that two genes, optomotor-blind and spalt are transcriptionally activated at different distances from DPP-secreting cells and provide evidence that these genes respond to different threshold concentrations of DPP protein. We propose that DPP acts as a gradient morphogen during wing development.

Wnt/Wingless signaling controls many fundamental processes during animal development. Wnt transduction is mediated by the association of beta-catenin with nuclear TCF DNA binding factors. Here we report the identification of two segment polarity genes in Drosophila, legless (lgs), and pygopus (pygo), and we show that their products are required for Wnt signal transduction at the level of nuclear beta-catenin. Lgs encodes the homolog of human BCL9, and we provide genetic and molecular evidence that these proteins exert their function by physically linking Pygo to beta-catenin. Our results suggest that the recruitment of Pygo permits beta-catenin to transcriptionally activate Wnt target genes and raise the possibility that a deregulation of these events may play a causal role in the development of B cell malignancies.

Members of the Hedgehog (Hh) family of secreted signaling proteins function as potent short-range organizers in animal development. Their range of action is limited by a C-terminal cholesterol tether and the upregulation of Patched (Ptc) receptor levels. Here we identify a novel segment-polarity gene in Drosophila, dispatched (disp), and demonstrate that its product is required in sending cells for normal Hh function. In the absence of Disp, cholesterol-modified but not cholesterol-free Hh is retained in these cells, indicating that Disp functions to release cholesterol-anchored Hh. Despite their opposite roles, Disp and Ptc share structural homology in the form of a sterol-sensing domain, suggesting that release and sequestration of cholesterol-modified Hh may be based on related molecular pathways.

One of the most dominant influences in the patterning of multicellular embryos is exerted by the Hedgehog (Hh) family of secreted signaling proteins. Here, we identify a segment polarity gene in Drosophila melanogaster, skinny hedgehog (ski), and show that its product is required in Hh-expressing cells for production of appropriate signaling activity in embryos and in the imaginal precursors of adult tissues. The ski gene encodes an apparent acyltransferase, and we provide genetic and biochemical evidence that Hh proteins from ski mutant cells retain carboxyl-terminal cholesterol modification but lack amino-terminal palmitate modification. Our results suggest that ski encodes an enzyme that acts within the secretory pathway to catalyze amino-terminal palmitoylation of Hh, and further demonstrate that this lipid modification is required for the embryonic and larval patterning activities of the Hh signal.

TGF beta elicits diverse cellular responses by signaling through receptor complexes formed by two distantly related transmembrane serine/threonine kinases called type II and type I receptors. Previous studies have indicated that the product of the Drosophila thick veins (tkv) gene is a type I receptor for decapentaplegic (dpp). Here, we show that the Drosophila gene punt encodes a homolog of a vertebrate type II receptor, and we demonstrate that punt, like tkv, is essential in vivo for dpp-dependent patterning processes. Because no dpp-related signalling is apparent in the absence of either the punt or tkv receptor, we infer that both receptors act in concert to transduce the dpp signal and that their functions cannot be replaced by the other extant type II and I receptors.