Stem cell niches are locations where stem cells reside and self-renew. Although studies have shown how niches maintain stem cell fate during tissue homeostasis, less is known about their roles in establishing stem cells. The adult Drosophila midgut is maintained by intestinal stem cells (ISCs); however, how they are established is unknown. Here, we show that an ISC progenitor generates a niche cell via Notch signaling. This niche uses the bone morphogenetic protein 2/4 homolog, decapentaplegic, to allow progenitors to divide in an undifferentiated state and subsequently breaks down and dies, resulting in the specification of ISCs in the adult midgut. Our results demonstrate a paradigm for stem cell-niche biology, where progenitors generate transient niches that determine stem cell fate and may give insights into stem cell specification in other tissues.Intercellular factors regulate stem cell proliferation and maintenance in stem cell niches in the Drosophila ovary (1) and testis (2,3), as well as in mammalian systems, such as the hematopoietic system (4-6), skin (7), and neural cells (8). These niches, which are generally fixed stromal locations, signal to prevent stem cell differentiation (9,10). However, even though the role of niches in the maintenance of tissue homeostasis has been well examined, relatively little is known about their function in establishing stem cell lineages during organogenesis.The lineage of intestinal stem cells (ISCs) in the adult Drosophila midgut (11,12) can be tracked to determine how progenitors establish different intestinal cells during development. Adult midgut progenitors (AMPs) from the three larval stages generate all epithelial cells in the adult midgut, including ISCs, enterocytes, and enteroendocrine cells (table S1) (13,14). In the first two instars (L1 and L2), AMPs proliferate and disperse throughout the midgut. Dispersal stops by the third instar (L3), when AMPs proliferate and form clusters known as midgut imaginal islands. During metamorphosis, when the larval gut histolyses, the islands merge and generate the adult midgut epithelium, including ISCs, enterocytes, and
