Shaggy and dishevelled exert opposite effects on Wingless and Decapentaplegic expression and on positional identity in imaginal discs.

The finding that Wingless (WG) and Decapentaplegic (DPP) suppress each others transcription provides a mechanism for creating developmental territories in fields of cells. Here, we address the mechanism of that antagonism. The dishevelled (dsh) and shaggy (sgg) genes encode intracellular proteins generally thought of as downstream of WG signaling. We have investigated the effects of changing either DSH or SGG activity on both cell fate and wg and dpp expression. At the level of cell fate in discs, DSH antagonizes SGG activity. At the level of gene expression, SGG positively regulates dpp expression and negatively regulates wg expression while DSH activity suppresses dpp expression and promotes wg expression. Sharp borders of gene expression correlating precisely with clone boundaries suggest that the effects of DSH and SGG on transcription of wg and dpp are not mediated by secreted factors but rather act through intracellular effectors. The interactions described here suggest a model for the antagonism between WG and DPP that is mediated via SGG. The model incorporates autoactivation and lateral inhibition, which are properties required for the production of stable patterns. The regulatory interactions described exhibit extensive ability to organize new pattern in response to manipulation or injury.