Proteolytic cleavage of Chordin as a switch for the dual activities of Twisted gastrulation in BMP signaling

Dorsoventral patterning is regulated by a system of interacting secreted pr oteins involving BMP, Chordin, Xolloid and Twisted gastrulation (Tsg). We h ave analyzed the molecular mechanism by which Tsg regulates BMP signaling. Overexpression of Tsg mRNA in Xenopus embryos has ventralizing effects simi lar to Xolloid, a metalloprotease that cleaves Chordin. In embryos dorsaliz ed by LiCl treatment, microinjection of Xolloid or Tsg mRNA restores the fo rmation of trunk-tall structures, indicating an increase in BMP signaling. Microinjection of Tsg mRNA leads to the degradation of endogenous Chordin f ragments generated by Xolloid. The ventralizing activities of Tsg require a n endogenous Xolloid-like activity, as they can be blocked by a dominant-ne gative Xolloid mutant. A BMP-receptor binding assay revealed that Tsg has t wo distinct and sequential activities on BMP signaling. First, Tsg makes Ch ordin a better BMP antagonist by forming a ternary complex that prevents bi nding of BMP to its cognate receptor. Second, after cleavage of Chordin by Xolloid, Tsg competes the residual anti-BMP activity of Chordin fragments a nd facilitates their degradation. This molecular pathway, in which Xolloid switches the activity of Tsg from a BMP antagonist to a pro-BMP signal once all endogenous full-length Chordin is degraded, may help explain how sharp borders between embryonic territories are generated.