The regulation of the segment polarity gene wingless is essential for the correct patterning of the Drosophila ectoderm. We have previously shown that the asymmetric activation of wingless downstream of Hedghog-signaling depends on the T-box transcription factors, midline and H15. Hedgehog activates wingless anterior to the Hedgehog domain. midline/H15 are responsible in part for repressing wingless in cells posterior to the Hedgehog expressing cells. Here, we show that Midline binds the Groucho co-repressor directly via the engrailed homology-1 domain and requires an intact engrailed-homology-1 domain to repress wingless. In contrast, the regulation of Serrate, a second target of midline repression, is not dependent on the engrailed-homology-1 domain. Furthermore, we identify a midline responsive region of the wingless cis-regulatory region and show that Midline binds to sequences within this region. Mutating these sequences in transgenic reporter constructs results in ectopic reporter expression in the midline-expression domain, consistent with wingless being a direct target of Midline repression.