The type beta transforming growth factor (TGF-beta) family of secreted factors encompasses a wide range of structurally related proteins that control the state of determination or differentiation in a wide variety of cell types. For all members of the family that have been studied at the protein level, the active moieties arise as dimers of the C-terminal approximately 110 amino acid fragment derived from much longer precursor polypeptides. The hallmark of the family is a series of 7 completely conserved cysteine residues in the C-terminus; other conserved amino acid sequences generally cluster in the vicinity of 6 of these 7 cysteines. This report focuses on our current understanding of the genetic structure and developmental role of the decapentaplegic (dpp) gene in Drosophila, the only member of the TGF-beta family thus far identified in invertebrates. The dpp polypeptide bears a sufficiently close relationship to two bone morphogenesis proteins (BMP-2A and BMP-2B) identified in mammals (Wozney et al. 1988, Science 242, 1528-1534) to warrant the suggestion that dpp and the BMP-2s are the descendants of a common ancestral gene. The protein-coding information for dpp is contained within a 6 kb DNA segment. An elaborate cis-regulatory apparatus, encompassing a greater than 55 kb DNA segment, has evolved to control expression of the dpp gene, which is required for determination of dorsal ectoderm in the early embryo, for normal distal outgrowth of the adult appendages, and for sundry other developmental events, which are currently less well-defined. Studies of chimeric individuals and observations of transcript accumulation in situ have demonstrated that the dpp gene is expressed along the A/P boundary of the imaginal disks. A possible role of dpp in elaborating positional information in imaginal disk development is discussed.