Expression of pipe in the somatic tissue of the Drosophila ovary is required for the formation of embryonic dorsal-ventral polarity. pipe, which encodes an enzyme similar to the glycosaminoglycan-modifying enzyme heparan sulfate 2-O-sulfotransferase, is expressed in a spatially restricted domain of follicle cells on the ventral side of the egg chamber. Mutations that affect follicular polarity correspondingly alter the spatial pattern of pipe expression. Directed expression of pipe in otherwise pipe mutant females restores embryonic lateral and ventral pattern elements and can orient the dorsal-ventral axis of the embryo. Thus, the localized expression of pipe and the spatially restricted modification of carbohydrate chains play pivotal roles in the mechanisms that establish embryonic pattern and integrate follicular and embryonic polarity.