Drosophila adult structures derive from imaginal discs, which are sacs with apposed epithelial sheets, the disc proper (DP) and the peripodial epithelium (PE). The Drosophila TGF-beta family member decapentaplegic (dpp) contributes to the development of adult structures through expression in all imaginal discs, driven by enhancers from the 3' cis-regulatory region of the gene. In the eye/antennal disc, there is 3' directed dpp expression in both the DP and PE associated with cell proliferation and eye formation. Here, we analyze a new class of dpp cis-regulatory mutations, which specifically disrupt a previously unknown region of dpp expression, controlled by enhancers in the 5' regulatory region of the gene and limited to the PE of eye/antennal discs. These are the first described Drosophila mutations that act by solely disrupting PE gene expression. The mutants display defects in the ventral adult head and alter peripodial but not DP expression of known dpp targets. However, apoptosis is observed in the underlying DP, suggesting that this peripodial dpp signaling source supports cell survival in the DP.