The formation of the BMP gradient which patterns the DV axis in flies and vertebrates requires several extracellular modulators like the inhibitory protein Sog/Chordin, the metalloprotease Tolloid (Tld), which cleaves Sog/Chordin, and the CR domain protein Twisted gastrulation (Tsg). While flies and vertebrates have only one sog/ chordin gene they possess several paralogues of tld and tsg. A simpler and probably ancestral situation is observed in the short-germ beetle Tribolium castaneum ( Tc), which possesses only one tld and one tsg gene. Here we show that in T. castaneum tld is required for early BMP signalling except in the head region and Tc-tld function is, as expected, dependent on Tc-sog. In contrast, Tc-tsg is required for all aspects of early BMP signalling and acts in a Tc-sog-independent manner. For comparison with Drosophila melanogaster we constructed fly embryos lacking all early Tsg activity (tsg;;srw double mutants) and show that they still establish a BMP signalling gradient. Thus, our results suggest that the role of Tsg proteins for BMP gradient formation has changed during insect evolution.