Abstract The Drosophila bone morphogenetic protein encoded by decapentaplegic (dpp) controls ventral head morphogenesis by expression in the head primordia, eye-antennal imaginal discs. These are epithelial sacs made of two layers: columnar disc proper cells and squamous cells of the peripodial epithelium. dpp expression related to head formation occurs in the peripodial epithelium; cis-regulatory mutations disrupting this expression display defects in sensory vibrissae, rostral membrane, gena, and maxillary palps. Here we document that disruption of this dpp expression causes apoptosis in peripodial cells and underlying disc proper cells. We further show that peripodial Dpp acts directly on the disc proper, indicating that Dpp must cross the disc lumen to act. We demonstrate that palp defects are mechanistically separable from the other mutant phenotypes; both are affected by the c-Jun N-terminal kinase pathway but in opposite ways. Slight reduction of both Jun N-terminal kinase and Dpp activity in peripodial cells causes stronger vibrissae, rostral membrane, and gena defects than Dpp alone; additionally, strong reduction of Jun N-terminal kinase activity alone causes identical defects. A more severe reduction of dpp results in similar vibrissae, rostral membrane, and gena defects, but also causes mutant maxillary palps. This latter defect is correlated with increased peripodial Jun N-terminal kinase activity and can be caused solely by ectopic activation of Jun N-terminal kinase. We conclude that formation of sensory vibrissae, rostral membrane, and gena tissue in head morphogenesis requires the action of Jun N-terminal kinase in peripodial cells, while excessive Jun N-terminal kinase signaling in these same cells inhibits the formation of maxillary palps.