Patterning of the Drosophila embryonic termini is achieved by localized activation of the Torso receptor by the growth factor Trunk. Governing this event is the perforin-like protein Torso-like, which is localized to the extracellular space at the embryo poles and has long been proposed to control localized proteolytic activation of Trunk. However, a protease involved in terminal patterning remains to be identified, and the role of Torso-like remains unknown. Here we find that Trunk is cleaved intracellularly by Furin proteases. We further show that Trunk is secreted, and that levels of extracellular Trunk are greatly reduced in torso-like null mutants. On the basis of these and previous findings, we suggest that Torso-like functions to mediate secretion of Trunk, thus providing the mechanism for spatially restricted activation of Torso. Our data represent an alternative mechanism for the spatial control of receptor signalling, and define a different role for perforin-like proteins in eukaryotes.