The optic lobe forms a prominent compartment of the Drosophila adult brain that processes visual input from the compound eye. Neurons of the optic lobe are produced during the larval period from two neuroepithelial layers called the outer and inner optic anlage (OOA, IOA). In the early larva, the optic anlagen grow as epithelia by symmetric cell division. Subsequently, neuroepithelial cells (NE) convert into neuroblasts (NB) in a tightly regulated spatio-temporal progression that starts at the edges of the epithelia and gradually move towards its centers. Neuroblasts divide at a much faster pace in an asymmetric mode, producing lineages of neurons that populate the different parts of the optic lobe. In this paper we have reconstructed the complex morphogenesis of the optic lobe during the larval period, and established a role for the Notch and Jak/Stat signaling pathways during the NE-NB conversion. After an early phase of complete overlap in the OOA, signaling activities sort out such that Jak/Stat is active in the lateral OOA which gives rise to the lamina, and Notch remains in the medial cells that form the medulla. During the third instar, a wave front of enhanced Notch activity progressing over the OOA from medial to lateral controls the gradual NE-NB conversion. Neuroepithelial cells at the medial edge of the OOA, shortly prior to becoming neuroblasts, express high levels of Delta, which activates the Notch pathway and thereby maintains the OOA in an epithelial state. Loss of Notch signaling, as well as Jak/Stat signaling, results in a premature NE-NB conversion of the OOA, which in turn has severe effects on optic lobe patterning. Our findings present the Drosophila optic lobe as a useful model to analyze the key signaling mechanisms controlling transitions of progenitor cells from symmetric (growth) to asymmetric (differentiative) divisions.