The Toll receptor was originally identified as an indispensable molecule for Drosophila embryonic development and subsequently as an essential component of innate immunity from insects to humans. Although in Drosophila the Easter protease processes the pro-Spätzle protein to generate the Toll ligand during development, the identification of the protease responsible for pro-Spätzle processing during the immune response has remained elusive for a decade. Here, we report a protease, called Spätzle-processing enzyme (SPE), required for Toll-dependent antimicrobial response. Flies with reduced SPE expression show no noticeable pro-Spätzle processing and become highly susceptible to microbial infection. Furthermore, activated SPE can rescue ventral and lateral development in embryos lacking Easter, showing the functional homology between SPE and Easter. These results imply that a single ligand/receptor-mediated signaling event can be utilized for different biological processes, such as immunity and development, by recruiting similar ligand-processing proteases with distinct activation modes.