Drosophila embryonic dorsal-ventral polarity originates in the ovarian follicle through the restriction of pipe gene expression to a ventral subpopulation of follicle cells. Pipe, a homolog of vertebrate glycosaminoglycan-modifying enzymes, directs the ventral activation of an extracellular serine proteolytic cascade which defines the ventral side of the embryo. When pipe is expressed uniformly in the follicle cell layer, a strong ventralization of the resulting embryos is observed. Here, we show that this ventralization is dependent on the other members of the dorsal group of genes controlling dorsal-ventral polarity, but not on the state of the Epidermal Growth Factor Receptor signal transduction pathway which defines egg chamber polarity. Pipe protein expressed in vertebrate tissue culture cells localizes to the endoplasmic reticulum. Strikingly, coexpression of the dorsal group gene windbeutel in those cells directs Pipe to the Golgi. Similarly, Pipe protein exhibits an altered subcellular localization in the follicle cells of females mutant for windbeutel. Thus, Windbeutel protein enables the correct subcellular distribution of Pipe to facilitate its pattern-forming activity.