The TGF-β family member Decapentaplegic (Dpp) is a key regulator of patterning and growth in development of Drosophila. Binding of Dpp to its receptors triggers the activation of the intracellular Smad pathway. It has recently been shown that Dpp signalling represses genes in several tissues by direct binding of the Smad proteins Mad and Medea and the recruitment of the nuclear zinc finger protein Schnurri to small regulating sequences called Silencer Elements (SEs). A key target of this SE-mediated repression is the brinker gene. Brinker is the default repressor of the Dpp signalling pathway and its removal is a prerequisite for transcriptional activation of most of the Dpp target genes. To address the question if there is, analogous to the SE-mediated repression, also a simple, not tissue-specific mechanism to activate target genes, we analyzed the regulation of dad. The dad gene encodes the only Drosophila inhibitory Smad and is a potential direct target of Dpp signalling. We identified the minimal enhancer of dad and discovered a short motif that we called Activating Element (AE). The sequence of the AE is closely related to the one of the SE, but differs in important nucleotides. As a consequence, the AE cannot recruit the repressor Schnurri. We demonstrated that the AE integrates both repressive input by Brinker as well as activating input by Mad and Medea. After characterization of the AE and elaboration of a consensus sequence, we were able to predict and successfully identify functional AEs in enhancers of other known (and hitherto unknown) direct target genes of Dpp. This is the first description of an activating Dpp-response element that is not restricted to a distinct enhancer and marks a general mechanism by which Dpp can activate target genes.