The nudel gene is maternally required to define dorsoventral polarity of the Drosophila embryo. It encodes an unusual mosaic protein with a protease domain that may trigger the protease cascade required for ventral development. We describe phenotypic and molecular analyses of nudel mutations that provide further insight into nudel protein function. Surprisingly, nudel mutations primarily cause either dorsalized embryos in which dorsal cell fates are expanded over ventral and lateral cell fates or fragile eggs that fail to develop beyond early embryonic stages. The nudel protein is therefore required not only for embryonic dorsoventral polarity but also for structural integrity of the egg. Complementation and antagonistic interactions between nudel alleles suggest that the nudel protein is functionally modular and that protein-protein interactions are important for nudel protein function. Three nudel mutations that produce dorsalized embryos map to the protease domain of nudel, suggesting that this domain is specifically required for defining embryonic dorsoventral polarity. Finally, certain combinations of nudel alleles simultaneously produce completely dorsalized and normal embryos yet very few embryos of intermediate mutant phenotypes. The unusual biphasic distribution of phenotypes may indicate that nudel activity above a threshold is required to generate embryonic dorsoventral polarity.