A fundamental question in developmental biology is how tissue growth and patterning are coordinately regulated to generate complex organs with characteristic shapes and sizes. We showed that in the developing primordium that produces the Drosophila adult trachea, the homeobox transcription factor Cut regulates both growth and patterning, and its effects depend on its abundance. Quantification of the abundance of Cut in the developing airway progenitors during late larval stage 3 revealed that the cells of the developing trachea had different amounts of Cut, with the most proliferative region having an intermediate amount of Cut and the region lacking Cut exhibiting differentiation. By manipulating Cut abundance, we showed that Cut functioned in different regions to regulate proliferation or patterning. Transcriptional profiling of progenitor populations with different amounts of Cut revealed the Wingless (known as Wnt in vertebrates) and Notch signaling pathways as positive and negative regulators of cut expression, respectively. Furthermore, we identified the gene encoding the receptor Breathless (Btl, known as fibroblast growth factor receptor in vertebrates) as a transcriptional target of Cut. Cut inhibited btl expression and tracheal differentiation to maintain the developing airway cells in a progenitor state. Thus, Cut functions in the integration of patterning and growth in a developing epithelial tissue.