Gurken signals from the oocyte to the adjacent follicle cells twice during Drosophila oogenesis; first to induce posterior fate, thereby polarising the anterior-posterior axis of the future embryo and then to induce dorsal fate and polarise the dorsal-ventral axis. Here we show that Gurken induces two different follicle cell fates because the follicle cells at the termini of the egg chamber differ in their competence to respond to Gurken from the main-body follicle cells in between. By removing the putative Gurken receptor, Egfr, in clones of cells, we show that Gurken signals directly to induce posterior fate in about 200 cells, defining a terminal competence domain that extends 10-11 cell diameters from the pole. Furthermore, small clones of Egfr mutant cells at the posterior interpret their position with respect to the pole and differentiate as the appropriate anterior cell type. Thus, the two terminal follicle cell populations contain a symmetric prepattern that is independent of Gurken signalling. These results suggest a three-step model for the anterior-posterior patterning of the follicular epithelium that subdivides this axis into at least five distinct cell types. Finally, we show that Notch plays a role in both the specification and patterning of the terminal follicle cells, providing a possible explanation for the defect in anterior-posterior axis formation caused by Notch and Delta mutants.