The decapentaplegic gene (dpp), which encodes a growth factor-like protein (Padgett et al. 1987), is implicated in several morphogenetic events in Drosophila melanogaster. We define here a novel embryonic function encoded by dppHin+ alleles of the dpp gene. dppHin null homozygotes die as ventralized embryos. dppHin activity is not required in the maternal germ line since lack of dppHin function during oogenesis has no effect on the zygotic phenotype. Since dppHin null embryos are already abnormal early in gastrulation, the dppHin product is an early-acting, strictly zygotic function involved in establishing the embryonic dorsal-ventral pattern. Several maternally acting dorsalizing genes are thought to be required for the establishment of a dorsal-ventral morphogenetic gradient (Anderson et al. 1985b). We have examined the interactions of dppHin mutations with three of these genes. Embryos null for dppHin and derived from a mother homozygous for a dorsalizing mutation exhibit a lateralized phenotype, indicating that the dorsal-ventral identity of the epidermis in part derives from the direct or indirect regulation of dppHin activity by these genes.