We have expressed the segment polarity gene wingless (wg) ectopically in imaginal discs to examine its regulation of both ventral patterning and transdetermination. By experimentally manipulating the amount of Wg protein, we show that different thresholds of Wg activity elicit different outcomes, which are mediated by regulation of decapentaplegic (dpp) expression and result in alterations in the expression of homeotic genes. A high level of Wg activity leads to loss of all dorsal pattern elements and the formation of a complete complement of ventral pattern elements on the dorsal side of legs, and is correlated with repression of dpp expression. wg expression in dorsal cells of each disc also leads to dose-dependent transdetermination in those cells in homologous discs such as the labial, antennal and leg, but not in cells of dorsally located discs. When dpp expression is repressed by high levels of Wg, transdetermination does not occur, confirming that dpp participates with wg to induce transdetermination. These and other experiments suggest that dorsal expression of wg alters disc patterning and disc cell determination by modulating the expression of dpp. The dose-dependent effects of wg on dpp expression, ventralization of dorsal cells and transdetermination support a model in which wg functions as a morphogen in imaginal discs.