The dermomyotome develops into myotome and dermis. We previously showed that overall growth of the dermomyotome and myotome in the mediolateral direction occurs in a uniform pattern. While myofibers arise from all four dermomyotome lips, the dermis derives from both medial and lateral halves of the dermomyotome sheet. Here we mapped the fate of this epithelial sheet by analyzing cell types that arise from its central region. We found that these precursors give rise not only to dermis, as expected, but also to a population of proliferating progenitors in the myotome that maintain expression of PAX7, PAX3 and FREK. Given this dual fate, we asked whether single dermomyotome precursors generate both dermal and mitotic myoblast precursors, or alternatively, whether these cell types derive from distinct epithelial founders. Inovo clonal analysis revealed that single dermomyotome progenitors give rise to both derivatives. This is associated with a sharp change in the plane of cell division from the young epithelium, in which symmetrical divisions occur parallel to the mediolateral plane of the dermomyotome, to the dissociating dermomyotome, in which cell divisions become mostly perpendicular. Taken together with clonal analysis of the dermomyotome sheet, this suggests that a first stage of progenitor self-renewal, accounting for dermomyotomal expansion, is followed by fate segregation, which correlates with the observed shift in mitotic spindle orientation.