The Drosophila signaling molecule Wingless (Wg) plays crucial roles in cell-cell communications during development. In the developing nervous system, a previous study has shown that Wg acts non-autonomously to specify the fate of a specific neuronal precursor, NB4-2 (Q. Chu-LaGraff and C. Q. Doe (1993) Science 261, 1594-1597). The lack of autocrine specification of NB4-2 in Wg-expressing cells suggests that the response to Wg is spatially restricted, presumably through the activity of the Wg-receptor. I show that two other proteins, a transcription factor Gooseberry (Gsb) and a transmembrane protein Patched (Ptc), participate in the Wg-mediated specification of NB4-2 by controlling the response to the Wg signal. In gsb mutants, Wg-positive NB5-3 is transformed to NB4-2 in a Wg-dependent manner, suggesting that Gsb normally represses the capacity to respond to the Wg signal. In ptc mutants, Gsb is ectopically expressed in normally Wg-responsive cells, thus preventing the Wg response and consequently the correct specification of NB4-2 does not take place. This conclusion is supported by the observation that NB4-2 can be specified in gsb;ptc double mutants in a Wg-dependent manner. Moreover, ectopic expression of Gsb from the hsp7O-gsb transgene also blocks the response to the Wg signal. I propose that the responsiveness to the Wg signal is controlled by sequential negative regulation, ptc-->gsb-->Wg receptor. The timing of the response to Gsb suggests that the specification of neuroblast identities takes place within the neuroectoderm, prior to neuroblast delamination.