The Drosophila leg is subdivided into two mutually antagonistic proximal and distal domains. The proximal domain is defined by the activity of the homeobox genes homothorax and extradenticle and the distal one by the Dpp/Wg targets Distal-less (Dll) and dachshund (dac). It is known that hth/exd function prevents the activity of Dpp and Wg response genes and that cells deficient for exd activity in the proximal domain differentiate pattern elements corresponding to more distal leg regions. We report new results on the role of hth/exd antagonising the Dpp pathway. In cells expressing hth in the distal leg, there is a debilitation of the Dpp pathway which is reflected in lower levels of Mad phosphorylation and in increased levels of the receptor thick veins. Ectopic hth expression in the distal leg results in JNK-mediated apoptosis, decreased growth and pattern abnormalities. It also causes a general proximalisation of the appendage, which can be explained by interference with the Dpp and Wg pathways. We also report that the repression by hth/exd of the Dpp and Wg target Distal-less is not achieved at the level of transcription but preventing the activation of Dll target genes. We propose that hth/exd function contributes to the normal identity of proximal cells both by limiting the influence of the Dpp and Wg pathways and by activating proximal genes like teashirt (tsh) and aristaless (al).