The adult appendages of Drosophila develop from imaginal discs. An early step in disc patterning involves the formation of developmental boundaries that subdivide the discs into compartments. Anterior and posterior compartments are established in the embryo. Later in development a new boundary originates to subdivide the wing disc into dorsal and ventral compartments, which correspond to the dorsal and ventral surfaces of the adult wing. We report here that spatially localized expression of the homeobox gene apterous (ap) specifies the identity of dorsal cells in the wing. The boundary of cell lineage restriction between dorsal and ventral compartments coincides with the limit of the domain of ap expression. Using genetic mosaics, we show that juxtaposition of dorsal and ventral cells induces formation of the wing margin. We present evidence that the dorsal-ventral boundary promotes growth and serves as a pattern-organizing center in the wing disc.