The gradient morphogen Decapentaplegic (Dpp) organizes pattern by inducing the transcription of different target genes at distinct threshold concentrations during Drosophila development. An important, albeit indirect, mode by which Dpp controls the spatial extent of its targets is via the graded downregulation of brinker, whose product in turn negatively regulates the expression of these targets. Here we report the molecular dissection of the cis-regulatory sequences of optomotor-blind (omb), a Dpp target gene in the wing. We identify a minimal 284 bp Dpp response element and demonstrate that it is subject to Brinker (Brk) repression. Using this omb wing enhancer, we show that Brk is a sequence-specific DNA binding protein. Mutations in the high-affinity Brk binding site abolish responsiveness of this omb enhancer to Brk and also compromise the input of an unknown transcriptional activator. Our results therefore identify Brk as a novel transcription factor antagonizing Dpp signalling by directly binding target genes and repressing their expression.