Drosophila T cell factor (dTcf) mediates transcriptional activation in the presence of Wingless signalling and repression in its absence. Wingless signalling is required for the correct expression of decapentaplegic (dpp), a Transforming Growth Factor (beta) family member, in parasegments 3 and 7 of the Drosophila visceral mesoderm. Here we demonstrate that a dpp enhancer element, which directs expression of a reporter gene in the visceral mesoderm in a pattern indistinguishable from dpp, has two functional dTcf binding sites. Mutations that reduce or eliminate Wingless signalling abolish dpp reporter gene expression in parasegment 3 and reduce it in parasegment 7 while ectopic expression of Wingless signalling components expand reporter gene expression anteriorly in the visceral mesoderm. However, mutation of the dTcf binding sites in the dpp enhancer results in ectopic expression of reporter gene expression throughout the visceral mesoderm, with no diminution of expression in the endogenous sites of expression. These results demonstrate that the primary function of dTcf binding to the dpp enhancer is repression throughout the visceral mesoderm and that activation by Wingless signalling is probably not mediated via these dTcf binding sites to facilitate correct dpp expression in the visceral mesoderm.