The evolutionarily conserved JNK/AP-1 (Jun N-terminal kinase/activator protein 1) and BMP (Bone Morphogenetic Protein) signaling cascades are deployed hierarchically to regulate dorsal closure in the fruit fly Drosophila melanogaster. In this developmental context, the JNK/AP-1 signaling cascade transcriptionally activates BMP signaling in leading edge epidermal cells. Here we show that the mummy (mmy) gene product, which is required for dorsal closure, functions as a BMP signaling antagonist. Genetic and biochemical tests of Mmy's role as a BMP-antagonist indicate that its function is independent of AP-1, the transcriptional trigger of BMP signal transduction in leading edge cells. pMAD (phosphorylated Mothers Against Dpp) activity data show the mmy gene product to be a new type of epidermal BMP regulator - one which transforms a BMP ligand from a long- to a short-range signal. mmy codes for the single UDP-N-acetylglucosamine pyrophosphorylase in Drosophila, and its requirement for attenuating epidermal BMP signaling during dorsal closure points to a new role for glycosylation in defining a highly restricted BMP activity field in the fly. These findings add a new dimension to our understanding of mechanisms modulating the BMP signaling gradient.