Drosophila bunched integrates opposing DPP and EGF signals to set the operculum boundary

The Drosophila BMP homolog DPP can function as a morphogen, inducing multip le cell fates across a developmental field. However, it is unknown how grad ed levels of extracellular DPP are interpreted to organize a sharp boundary between different fates. Here we show that opposing DPP and EGF signals se t the boundary for an ovarian follicle cell fate. First, DPP regulates gene expression in the follicle cells that will create the operculum of the egg shell. DPP induces expression of the enhancer trap reporter A359 and repres ses expression of bunched, which encodes a protein similar to the mammalian transcription factor TSC-22. Second, DPP signaling indirectly regulates A3 59 expression in these cells by downregulating expression of bunched, Reduc ed bunched function restores A359 expression in cells that lack the Smad pr otein MAD; ectopic expression of BUNCHED suppresses A359 expression in this region. Importantly, reduction of bunched function leads to an expansion o f the operculum and loss of the collar at its boundary. Third, EGF signalin g upregulates expression of bunched. We previously demonstrated that the bu nched expression pattern requires the EGF receptor ligand GURKEN, Here we s how that activated EGF receptor is sufficient to induce ectopic bunched exp ression. Thus, the balance of DPP and EGF signals sets the boundary of bunc hed expression. We propose that the juxtaposition of cells with high and lo w BUNCHED activity organizes a sharp boundary for the operculum fate.