Brinker (Brk), a novel protein with features of a transcriptional repressor, regulates the graded response to Decapentaplegic (Dpp) in appendage primordia of Drosophila. Here, we show that in the embryo brk also has differential effects on Dpp target genes, depending on the level of Dpp activity required for their activation. Low-level target genes, like dpp itself, tolloid and early zerknüllt, show strong ectopic expression in ventrolateral regions of brk mutant embryos; intermediate-level target genes like pannier show weak ectopic expression, while high-level target genes like u-shaped and rhomboid are not affected. Ectopic target gene activation in the absence of brk is independent of Dpp, Tkv and Medea, indicating that Dpp signaling normally antagonizes brk's repression of these target genes. brk is expressed like short gastrulation (sog) in ventrolateral regions of the embryo abutting the dpp domain. Here, both brk and sog antagonize the antineurogenic activity of Dpp so that only in brk sog double mutants is the neuroectoderm completely deleted.