In holometabolous insects, the adult appendages and internal organs form anew from larval progenitor cells during metamorphosis. As described here, the adult Drosophila midgut, including intestinal stem cells (ISCs), develops from adult midgut progenitor cells (AMPs) that proliferate during larval development in two phases. Dividing AMPs first disperse, but later proliferate within distinct islands, forming large cell clusters that eventually fuse during metamorphosis to make the adult midgut epithelium. We find that signaling through the EGFR/RAS/MAPK pathway is necessary and limiting for AMP proliferation. Midgut visceral muscle produces a weak EGFR ligand, Vein, which is required for early AMP proliferation. Two stronger EGFR ligands, Spitz and Keren, are expressed by the AMPs themselves and provide an additional, autocrine mitogenic stimulus to the AMPs during late larval stages.