Appendage formation in insects and vertebrates depends upon signals from both the anterior-posterior and dorsal-ventral (DV) axes. In Drosophila, wing formation is organized symmetrically around the DV boundary of the growing wing imaginal disc and requires interactions between dorsal and ventral cells. Compartmentalization of the wing disc, dorsal cell behavior, and the expression of two dorsally expressed putative signaling molecules, fringe (fng) and Serrate (Ser), are regulated by the apterous selector gene. Here, we demonstrate that fng and Ser have distinct roles in a novel cell recognition and signal induction process. fng serves as a boundary-determining molecule such that Ser is induced wherever cells expressing fng and cells not expressing fng are juxtaposed. Ser in turn triggers the expression of genes involved in wing growth and patterning on both sides of the DV boundary.