Muscle development initiates in the Drosophila embryo with the segregation of single progenitor cells, from which a complete set of myofibres arises. Each progenitor is assigned a unique fate, characterized by the expression of particular identity genes. We now demonstrate that the Drosophila epidermal growth factor receptor provides an inductive signal for the specification of a large subset of muscle progenitors. In the absence of the receptor or its ligand, SPITZ, specific progenitors fail to segregate. The resulting unspecified mesodermal cells undergo programmed cell death. In contrast, receptor hyperactivation generates supernumerary progenitors, as well as the duplication of at least one SPITZ-dependent myofibre. The development of individual muscles is differentially sensitive to variations in the level of signalling by the epidermal growth factor receptor. Such graded myogenic effects can be influenced by alterations in the functions of Star and rhomboid. In addition, muscle patterning is dependent on the generation of a spatially restricted, activating SPITZ signal, a process that may rely on the localized mesodermal expression of RHOMBOID. Thus, the epidermal growth factor receptor contributes both to muscle progenitor specification and to the diversification of muscle identities.