The Decapentaplegic and Notch signaling pathways are thought to direct regional specification in the Drosophila eye-antennal epithelium by controlling the expression of selector genes for the eye (Eyeless/Pax6, Eyes absent) and/or antenna (Distal-less). Here, we investigate the function of these signaling pathways in this process. We find that organ primordia formation is indeed controlled at the level of Decapentaplegic expression but critical steps in regional specification occur earlier than previously proposed. Contrary to previous findings, Notch does not specify eye field identity by promoting Eyeless expression but it influences eye primordium formation through its control of proliferation. Our analysis of Notch function reveals an important connection between proliferation, field size, and regional specification. We propose that field size modulates the interaction between the Decapentaplegic and Wingless pathways, thereby linking proliferation and patterning in eye primordium development.