Patterning by morphogen gradients relies on the capacity to generate reproducible distribution profiles. Morphogen spread depends on kinetic parameters, including diffusion and degradation rates, which vary between embryos, raising the question of how variability is controlled. We examined this in the context of Toll-dependent dorsoventral (DV) patterning of the Drosophila embryo. We find that low embryo-to-embryo variability in DV patterning relies on wntD, a Toll-target gene expressed initially at the posterior pole. WntD protein is secreted and disperses in the extracellular milieu, associates with its receptor Frizzled4, and inhibits the Toll pathway by blocking the Toll extracellular domain. Mathematical modeling predicts that WntD accumulates until the Toll gradient narrows to its desired spread, and we support this feedback experimentally. This circuit exemplifies a broadly applicable induction-contraction mechanism, which reduces patterning variability through a restricted morphogen-dependent expression of a secreted diffusible inhibitor.