The decapentaplegic (dpp) gene in Drosophila melanogaster encodes a TGF-beta-like signalling molecule that is expressed in a complex and changing pattern during development. One of dpp's contributions is to proximal-distal outgrowth of the adult appendages, structures derived from the larval imaginal disks. Appendage specific mutations of dpp fall in a 20 kb interval 3′ to the known dpp transcripts. Here, we directly test the hypothesis that these mutations define an extended 3′ cis-regulatory region. By analysis of germ-line transformants expressing a reporter gene, we show that sequences from this portion of the gene, termed the dppdisk region, are capable of directing expression comparable to that defined by RNA in situ hybridization. We localize two intervals of the dppdisk region that appear to account for much of the dpp spatial pattern in imaginal disks and discuss the positions of these important elements in terms of the genetics of dpp. Finally, we provide evidence to suggest that one of our constructs expresses beta-galactosidase in the early imaginal disk primordia in the embryo, at approximately the time when they are set aside from surrounding larval epidermal tissues. Thus, dpp may be involved directly in the determination of the imaginal disks.