At least three genes that play crucial roles in dorsal-ventral patterning of the Drosophila embryo appear to encode extracellular proteases. These proteases are involved in the generation of localized extracellular ligands for membrane receptors. Because the sequences of these gene products closely resemble those of mammalian enzymes that have been studied in detail biochemically, it is possible to draw on the wealth of information on the biochemical mechanisms that regulate protease activity to make inferences about how proteases can be used to generate spatial asymmetries within fields of cells.