Boundaries establish and maintain separate populations of cells critical for organ formation. We show that Notch signaling establishes the boundary between two types of post-mitotic epithelial cells, the Rhomboid- and the Broad-positive cells. These cells will undergo morphogenetic movements to generate the two sides of a simple organ, the dorsal appendage tube of the Drosophila egg chamber. The boundary forms due to a difference in Notch levels in adjacent cells. The Notch expression pattern mimics the boundary; Notch levels are high in Rhomboid cells and low in Broad cells. Notch(-) mutant clones generate an ectopic boundary: ectopic Rhomboid cells arise in Notch(+) cells adjacent to the Notch(-) mutant cells but not further away from the clonal border. Pangolin, a component of the Wingless pathway, is required for Broad expression and for rhomboid repression. We further show that Broad represses rhomboid cell autonomously. Our data provide a foundation for understanding how a single row of Rhomboid cells arises adjacent to the Broad cells in the dorsal appendage primordia. Generating a boundary by the Notch pathway might constitute an evolutionarily conserved first step during organ formation in many tissues.