Dorsoventral polarity of the Drosophila embryo requires maternal spätzle-Toll signaling to establish a nuclear gradient of Dorsal protein. The shape of this gradient is altered in embryos produced by females carrying dominant alleles of easter (ea D ). The easter gene encodes a serine protease that generates processed Spätzle, which is proposed to act as the Toll ligand. By examining the expression domains of the zygotic genes zen, sog, rho and twist, which are targets of nuclear Dorsal, we show that the slope of the Dorsal gradient is progressively flattened in stronger ea D alleles. In the wild-type embryo, activated Easter is found in a high Mr complex called Ea-X, which is hypothesized to contain a protease inhibitor. In ea D embryo extracts, we detect an Easter form corresponding to the free catalytic domain, which is never observed in wild type. These mutant ea D proteins retain protease activity, as determined by the production of processed Spätzle both in the embryo and in cultured Drosophila cells. These experiments suggest that the ea D mutations interfere with inactivation of catalytic Easter, and imply that this negative regulation is essential for generating the wild-type shape of the Dorsal gradient.