Establishment of dorsoventral polarity during Drosophila oogenesis requires localized intercellular communication between the follicular cells and the oocyte. This is initiated by the transmission of a "dorsal signal" from the oocyte to the anterior dorsal follicle cells by the EGF receptor (EGF-R) pathway and is followed by transmission of a second signal from the ventral follicle cells back to the embryo. We show that the zinc finger transcription factor CF2 participates in these processes. CF2 is suppressed by EGF-R signaling in the anterior dorsal follicle cells. Altered expression patterns of CF2 result in specific dorsoventral patterning defects in egg chambers and in embryos, as demonstrated phenotypically and with molecular markers. CF2 appears to act as a repressor of dorsal follicle cell fates and specifically as a repressor of the rhomboid gene transcription.