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Dorsoventral polarity of the Drosophila embryo is established by a signal transduction pathway in which the maternal transmembrane protein Toll appears to function as the receptor for a ventrally localized extracellular ligand. Certain dominant Toll alleles encode proteins that behave as partially ligand-independent receptors, causing embryos containing these proteins to become ventralized. In extracts of embryos derived from mothers carrying these dominant alleles, we detected a polypeptide of approximately 35 kDa in addition to full-length Toll polypeptides with antibodies to Toll. Our biochemical analyses suggest that the smaller polypeptide is a truncated form of Toll lacking extracellular domain sequences. To assay the biological activity of such a shortened form of Toll, we synthesized RNA encoding a mutant polypeptide lacking the leucine-rich repeats that comprise most of Toll's extracellular domain and injected this RNA into embryos. The truncated Toll protein elicited the most ventral cell fate independently of the wild-type Toll protein and its ligand. These results support the view that Toll is a receptor whose extracellular domain regulates the intrinsic signaling activity of its cytoplasmic domain.