Cell proliferation in the developing renal tubules of Drosophila is strikingly patterned, occurring in two phases to generate a consistent number of tubule cells. The later phase of cell division is promoted by EGF receptor signalling from a specialised subset of tubule cells, the tip cells, which express the protease Rhomboid and are thus able to secrete the EGF ligand, Spitz. We show that the response to EGF signalling, and in consequence cell division, is patterned by the specification of a second cell type in the tubules. These cells are primed to respond to EGF signalling by the transcription of two pathway effectors, PointedP2, which is phosphorylated on pathway activation, and Seven up. While expression of pointedP2 is induced by Wingless signalling, seven up is initiated in a subset of the PointedP2 cells through the activity of the proneural genes. We demonstrate that both signalling and responsive cells are set aside in each tubule primordium from a proneural gene-expressing cluster of cells, in a two-step process. First, a proneural cluster develops within the domain of Wingless-activated, pointedP2-expressing cells to initiate the co-expression of seven up. Second, lateral inhibition, mediated by the neurogenic genes, acts within this cluster of cells to segregate the tip cell precursor, in which proneural gene expression strengthens to initiate rhomboid expression. As a consequence, when the precursor cell divides, both daughters secrete Spitz and become signalling cells. Establishing domains of cells competent to transduce the EGF signal and divide ensures a rapid and reliable response to mitogenic signalling in the tubules and also imposes a limit on the extent of cell division, thus preventing tubule hyperplasia.