During Drosophila oogenesis, localization of the transforming growth factor alpha (TGFalpha)-like signaling molecule Gurken to the oocyte membrane is required for polarity establishment of the egg and embryo. To test Gurken domain functions, full-length and truncated forms of Gurken were expressed ectopically using the UAS/Gal4 expression system, or in the germline using the endogenous promoter. GrkDeltaC, a deletion of the cytoplasmic domain, localizes to the oocyte membrane and can signal. GrkDeltaTC, which lacks the transmembrane and cytoplasmic domains, retains signaling ability when ectopically expressed in somatic cells. However, in the germline, the GrkDeltaTC protein accumulates throughout the oocyte cytoplasm and cannot signal. In addition, we found that several strong gurken alleles contain point mutations in the transmembrane region. We conclude that secretion of Gurken requires its transmembrane region, and propose a model in which the gene cornichon mediates this process.