During Drosophila embryogenesis, ectodermal cells of the lateral epithelium stretch in a coordinated fashion to internalize the amnioserosa cells and close the embryo dorsally. This process, dorsal closure, requires two signaling pathways: the Drosophila Jun-amino-terminal kinase (DJNK) pathway and the Dpp pathway. We have identified mutations in DJun and show that DJNK controls dorsal closure by activating DJun and inactivating the ETS repressor Aop/Yan by phosphorylation. DJun and Aop regulate dpp expression in the most dorsal row of cells. Secreted Dpp then instructs more ventrally located cells to stretch. Our results provide a causal link between the DJNK and Dpp pathways during dorsal closure. Interestingly, in vertebrates, transforming growth factor-beta and c-Jun regulate collagenase gene expression during wound healing, a process that also involves the closing of an epithelial sheath.