Patterning of the Drosophila embryonic head and tail is achieved by localised activation of the Torso receptor tyrosine kinase by the growth factor Trunk. Governing this event is the perforin-like protein Torso-like, which is localised to the extracellular space at the embryo poles. Torso-like has long been proposed to control extracellular proteolytic activation of Trunk, however a protease involved here remains to be identified, and the role of Torso-like remains unknown. Using the powerful genetic tools available in Drosophila, we made the surprising discovery that Trunk is cleaved intracellularly by two Furin proteases prior to its secretion. This led us to find that, rather than controlling proteolytic events, Torso-like functions to control localised secretion of Trunk, thus defining the mechanism for spatially-restricted activation of Torso. These data highlight the importance of Furins in embryonic patterning and reveal a new paradigm for the spatial control of receptor signalling by localised growth factor secretion.