The family of TGF-beta signalling molecules play inductive roles in va
rious developmental contexts(1). One member of this family, Drosophila
Decapentaplegic (Dpp)(2) serves as a morphogen that patterns both the
embryo(3,1) and adult(4,5). We have now isolated a gene, Daughters ag
ainst dpp (Dad), whose transcription is induced by Dpp, Dad shares wea
k homology with Drosophila Mad (Mothers against dpp)(6), a protein req
uired for transduction of Dpp signals. In contrast to Mad or the activ
ated Dpp receptor, whose overexpression hyperactivates the Dpp signall
ing pathway, overexpression of Dad blocks Dpp activity, Expression of
Dad together with either Mad or the activated receptor rescues phenoty
pic defects induced by each protein alone. Dad can also antagonize the
activity of a vertebrate homologue of Dpp, bone morphogenetic protein
(BMP-4; ref. 7), as evidenced by induction of dorsal or neural fate f
ollowing overexpression in Xenopus embryos. We conclude that the patte
rn-organizing mechanism governed by Dpp involves a negative-feedback c
ircuit in which Dpp induces expression of its own antagonist, Dad, Thi
s feedback loop appears to be conserved in vertebrate development.