wingless, a segment polarity gene required in every segment for the normal development of the Drosophila embryo, encodes a cysteine-rich protein with a signal peptide. A polyclonal antiserum localizes the wingless protein in approximately the same region of the embryo as the wingless mRNA. The pattern of antigen localization changes rapidly during development. In the extended germband stage, stripes of wingless staining are present in the trunk region just anterior to the parasegment boundary; wingless-expressing cells abut engrailed-expressing cells across that boundary. wingless antigen is seen both inside and outside the cell by electron microscopy: inside the cell, in small membrane-bound vesicles and in multivesicular bodies; outside the cell, close to or on the plasma membrane and associated with material in the intercellular space. The multivesicular bodies containing the wingless protein are occasionally found in engrailed-positive cells, suggesting that the wingless protein behaves as a paracrine signal.