In the follicle cell (FC) epithelium that surrounds the Drosophila egg, a complex set of cell signals specifies two cell fates that pattern the eggshell: the anterior centripetal FC that produce the operculum and the posterior columnar FC that produce the main body eggshell structure. We have previously shown that the long-range morphogen DPP represses the expression of the bunched (bun) gene in the anterior-most centripetal FC. bun, which encodes a homolog of vertebrate TSC-22/GILZ, in turn represses anterior gene expression and antagonizes Notch signaling to restrict centripetal FC fates in posterior cells. From a screen for novel targets of bun repression we have identified the C/EBP homolog slow border cells (slbo). At stage 10A, slbo expression overlaps bun in anterior FC; by stage 10B they repress each other's expression to establish a sharp slbo/bun expression boundary. The precise position of the slbo/bun expression boundary is sensitive to Notch signaling, which is required for both slbo activation and bun repression. As centripetal migration proceeds from stages 10B-14, slbo represses its own expression and both slbo loss-of-function mutations and overexpression approaches reveal that slbo is required to coordinate centripetal migration with nurse cell dumping. We propose that in anterior FC exposed to a Dpp morphogen gradient, high and low levels of slbo and bun, respectively, are established by modulation of Notch signaling to direct threshold cell fates. Interactions among Notch, slbo and bun resemble a conserved signaling cassette that regulates mammalian adipocyte differentiation.