CBP/p300 is a transcriptional co-activator that is recruited to enhancers by various DNA-binding proteins, including proteins whose activity is controlled by extracellular signals. Here, we report that Drosophila CBP loss-of-function mutants show specific defects which mimic those seen in mutants that lack the extracellular signal Dpp or its effector Mad. Furthermore, we find that CBP loss severely compromises the ability of Dpp target enhancers to respond to endogenous or exogenous Dpp. Finally, we show that CBP binds to the C-terminal domain of Mad. Our results provide evidence that CBP functions as a co-activator during Dpp signalling, and they suggest that Mad may recruit CBP to effect the transcriptional activation of Dpp-responsive genes during development.