Production of a DPP activity gradient in the early Drosophila embryo through the opposing actions of the SOG and TLD proteins

During early Drosophila embryogenesis, several zygotic gene products act to establish a posttranscriptional activity gradient of the morphogen DPP. Among these molecules, Tolloid, a putative metalloprotease related to BMP-1, enhances DPP function, while SOG, an ortholog of the Xenopus organizer Chordin, inhibits DPP function. Using epistasis tests and a Xenopus secondary axis induction assay, we show that TLD negates the inhibitory effects of SOG/CHD on DPP/BMP-type ligands. In transient transfection assays, we demonstrate that TLD cleaves SOG and that cleavage is stimulated by DPP. We propose that formation of the embryonic DPP activity gradient involves the opposing effects of SOG inhibiting DPP and TLD processing SOG to release DPP from the inhibitory complex.