Hedgehog (HH) and Decapentaplegic (DPP) direct anteroposterior patterning in the developing Drosophila wing by functioning as short- and long-range morphogens, respectively. Here, we show that the activity of DPP is graded and is directly regulated by a novel HH-dependent mechanism. DPP activity was monitored by visualizing the activated form of Mothers against dpp (MAD), a cytoplasmic transducer of DPP signaling. We found that activated MAD levels are highest near the source of DPP but are unexpectedly low in the cells that express dpp. HH induces dpp in these cells; it also attenuates their response to DPP by downregulating expression of the DPP receptor thick veins (tkv). We suggest that regulation of tkv by HH is a key part of the mechanism that controls the level and distribution of DPP.
