The appendages of Drosophila develop from the imaginal discs. During t
he extensive growth of these discs cell lineages are for the most part
unfixed, suggesting a strong role for cell-cell interactions in contr
olling the final pattern of differentiation. However, during early and
middle stages of development, discs are subdivided by strict lineage
restrictions into a small number of spatially distinct compartments. T
hese compartments appear to be maintained by stably inheriting states
of gene expression; the compartment-specific expression of two such 's
elector'-like genes, engrailed and apterous, are critical for anterior
-posterior and dorso-ventral compartmentalization, respectively. Recen
t work suggests that one purpose of compartmentalization is to establi
sh regions of specialized cells near compartment boundaries via interc
ompartmental induction, using molecules like the hedgehog protein. Thu
s, compartments can act as organizing centers for patterning within co
mpartments. Evidence for non-compartmental patterning mechanisms will
also be discussed.