Dorsoventral polarity of the Drosophila embryo is induced by a ventral extracellular signal, which is produced by a locally activated protease cascade within the extraembryonic perivitelline compartment. Local activation of the protease cascade depends on a positional cue that is laid down during oogenesis outside the oocyte. Here we present evidence that the nudel gene encodes an essential component of this cue. The nudel gene, which is expressed in follicle cells covering the oocyte, encodes an unusual mosaic protein resembling an extracellular matrix protein with a central serine protease domain. Our findings suggest that embryonic dorsoventral polarity is defined by a positional cue that requires the nudel protein to anchor and to trigger the protease cascade producing the polarity-inducing signal.