Drosophila embryonic dorsal-ventral polarity is defined by a maternally encoded signal transduction pathway. Gastrulation Defective, Snake, and Easter comprise a serine protease cascade that operates in the perivitelline space to generate active ligand for the Toll receptor, which resides in the embryonic membrane. Toll is activated only on the ventral side of the embryo. Spatial regulation of this pathway is initiated by the ventrally restricted expression of the sulfotransferase Pipe in the follicular epithelium that surrounds the developing oocyte. Pipe is thought to modify a target molecule that is secreted and localized within the ventral region of the egg and future embryo, where it influences the activity of the pathway such that active Toll ligand is produced only ventrally. A potential substrate for Pipe is encoded by nudel, which is expressed throughout the follicle cell layer and encodes a large, multi-functional secreted protein that contains a serine protease domain as well as other structural features characteristic of extracellular matrix proteins. A previous mosaic analysis suggested that the protease domain of Nudel is not a target for Pipe activity as its expression is not required in pipe-expressing cells, but failed to rule out such a role for other functional domains of the protein. To investigate this possibility, we carried out a mosaic analysis of additional nudel alleles, including some that affect the entire protein. Our analysis demonstrated that proteolytically processed segments of Nudel are secreted into the perivitelline space and stably localized, as would be expected for the target of Pipe, However, we found no requirement for nudel to be expressed in ventral, pipe-expressing follicle cells, thereby eliminating Nudel as an essential substrate of Pipe sulfotransferase activity.