Extracellular signals can act at different threshold levels to elicit disti
nct transcriptional and cellular responses. Here, we examine the transcript
ional regulation of the Wingless target gene Ultrabithorax (Ubx) in the emb
ryonic midgut of Drosophila. Our previous work showed that Ubx transcriptio
n is stimulated in this tissue by Dpp and by low levels of Wingless signall
ing. We now find that high levels of Wingless signalling can repress Ubx tr
anscription. The response sequence within the Ubx midgut enhancer required
for this repression coincides with a moth required for transcriptional stim
ulation by Dpp, namely a tandem of binding sites for the Dpp-tranducing pro
tein, Mad. Indeed, Wingless-mediated repression depends on low levels of Dp
p, although apparently not on Mad itself. In contrast, high levels of Dpp s
ignalling antagonize Wingless-mediated repression. This suggests that trans
criptional activation of Ubx is subject to competition between Dpp-activate
d Mad and another Smad whose function as a transcriptional repressor depend
s on high Wg signalling. Finally, we show that Wingless can repress its own
expression via an autorepressive feedback loop that results in a change of
the Wingless signalling profile during development.