Axis formation in the Drosophila wing depends on the localized expression of the secreted signaling molecule Decapentaplegic (Dpp). Dpp acts directly at a distance to specify discrete spatial domains, suggesting that it functions as a morphogen. Expression levels of the Dpp receptor thick veins (tkv) are not uniform along the anterior-posterior axis of the wing imaginal disc. Receptor levels are low where Dpp induces its targets Spalt and Omb in the wing pouch. Receptor levels increase in cells farther from the source of Dpp in the lateral regions of the disc. We present evidence that Dpp signaling negatively regulates tkv expression and that the level of receptor influences the effective range of the Dpp gradient. High levels of tkv sensitize cells to low levels of Dpp and also appear to limit the movement of Dpp outside the wing pouch. Thus receptor levels help to shape the Dpp gradient.