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The Drosophila Toll receptor does not interact directly with microbial determinants, but is instead activated by a cleaved form of the cytokine-like molecule Spätzle. During the immune response, Spätzle is processed by complex cascades of serine proteases, which are activated by secreted pattern-recognition receptors. Here, we demonstrate the essential role of ModSP, a modular serine protease, in the activation of the Toll pathway by gram-positive bacteria and fungi. Our analysis shows that ModSP integrates signals originating from the circulating recognition molecules GNBP3 and PGRP-SA and connects them to the Grass-SPE-Spätzle extracellular pathway upstream of the Toll receptor. It also reveals the conserved role of modular serine proteases in the activation of insect immune reactions.