The Jelly belly (Jeb)/Anaplastic Lymphoma Kinase (Alk) signalling pathway regulates myoblast fusion in the circular visceral mesoderm (VM) of Drosophila embryos via specification of founder cells. However, only a limited number of target molecules for this pathway are described. We have investigated the role of the Lame Duck (Lmd) transcription factor in VM development in relationship to Jeb/Alk signal transduction. We show that Alk signalling negatively regulates Lmd activity post-transcriptionally through the MEK/MAPK (ERK) cascade resulting in a relocalisation of Lmd protein from the nucleus to cytoplasm. It has previously been shown that downregulation of Lmd protein is necessary for the correct specification of founder cells. In the visceral mesoderm of lmd mutant embryos, fusion-competent myoblasts seem to be converted to 'founder-like' cells that are still able to build a gut musculature even in the absence of fusion. The ability of Alk signalling to downregulate Lmd protein requires the N-terminal 140 amino acids, as a Lmd(141-866) mutant remains nuclear in the presence of active ALK and is able to drive robust expression of the Lmd downstream target Vrp1 in the developing VM. Our results suggest that Lmd is a target of Jeb/Alk signalling in the VM of Drosophila embryos.