The decapentaplegic (dpp) gene in Drosophila encodes a secreted protein of the transforming growth factor beta superfamily of proteins, which, like its counterparts in vertebrates, participates in numerous developmental processes from embryogenesis into adulthood. In the embryo, dpp exhibits the properties of an extracellular morphogen, conveying spatial information along the dorsal-ventral axis of the embryo. The zerknullt (zen) gene is activated by dpp in a dorsal stripe, and is required for formation of the amnioserosa. This proposal outlines three experiments to address the question of how the dpp signal is transduced from outside the cell to the nucleus. The first two lines of experiments seek to use the power of Drosophila genetics to identify genes required for proper zen activity, looking for dominant enhancers and suppressors or weak zen mutants. Such mutations could define genes that act in the dpp signal transduction pathway. Experiments are presented to distinguish where within the pathway each gene acts. The third line of experiments will complement the genetic analysis of the system and will involve a molecular dissection of the promoter region of the zen gene. Together these experiments should shed light on how signals are transduced downstream of TGF-beta family members and could provide insight into the roles of TGF-beta during mammalian development.