The spätzle gene is required for proper specification of positional information along the dorsal-ventral axis of the Drosophila embryo and for induction of the innate immune response to fungal infection. It has been shown to encode a precursor of a Nerve Growth Factor-like ligand which is also a member of the cysknot protein superfamily. In dorsal-ventral patterning, the most widely accepted model of the pathway places Spätzle at the end of a ventrally restricted protease cascade that results in the proteolytic processing of the precursor form of Spätzle to an active ligand which is thought to bind to the Toll receptor. Here we show that the spätzle gene encodes at least ten different protein isoforms as a result of complex alternative splicing in precellular blastoderm embryos. Multiple transcripts are clearly present up until the time of cellularization, at which point most transcripts can no longer be detected. Nine isoforms were expressed and at least five are efficiently secreted in a heterologous protein expression system. RNA microinjection experiments demonstrate that three isoforms completely rescue embryos from spätzle null mothers, while most of the others rescue to a lesser extent. The phenotypic rescue activities of several isoforms and the relevance of these isoforms to the generation of the ventralizing signal are discussed.