Although directed migration is a feature of both individual cells and cell groups, guided migration has been studied most extensively for single cells in simple environments. Collective guidance of cell groups remains poorly understood, despite its relevance for development and metastasis. Neural crest cells and neuronal precursors migrate as loosely organized streams of individual cells, whereas cells of the fish lateral line, Drosophila tracheal tubes and border-cell clusters migrate as more coherent groups. Here we use Drosophila border cells to examine how collective guidance is performed. We report that border cells migrate in two phases using distinct mechanisms. Genetic analysis combined with live imaging shows that polarized cell behaviour is critical for the initial phase of migration, whereas dynamic collective behaviour dominates later. PDGF- and VEGF-related receptor and epidermal growth factor receptor act in both phases, but use different effector pathways in each. The myoblast city (Mbc, also known as DOCK180) and engulfment and cell motility (ELMO, also known as Ced-12) pathway is required for the early phase, in which guidance depends on subcellular localization of signalling within a leading cell. During the later phase, mitogen-activated protein kinase and phospholipase Cgamma are used redundantly, and we find that the cluster makes use of the difference in signal levels between cells to guide migration. Thus, information processing at the multicellular level is used to guide collective behaviour of a cell group.