The decapentaplegic (dpp) gene of Drosophila melanogaster encodes a polypeptide of the transforming growth factor-beta family of secreted factors. It is required for the proper development of both embryonic and adult structures, and may act as a morphogen in the embryo. In wing imaginal discs, dpp is expressed and required in a stripe of cells near the anterior-posterior compartment boundary. Here we show that viable mutations in the segment polarity genes patched (ptc) and costal-2 (cos2) cause specific alterations in dpp expression within the anterior compartment of the wing imaginal disc. The interaction between ptc and dpp is particularly interesting; both genes are expressed with similar patterns at the anterior-posterior compartment boundary of the disc, and mis-expressed in a similar way in segment polarity mutant backgrounds like ptc and cos2. This mis-expression of dpp could be correlated with some of the features of the adult mutant phenotypes. We propose that ptc controls dpp expression in the imaginal discs, and that the restricted expression of dpp near the anterior-posterior compartment boundary is essential to maintain the wild-type morphology of the wing disc.