Background: Gut formation is a key event during animal development. Recent genetic analysis in chick, mice, and Drosophila has identified Hedgehog and TGFbeta signals as essential players for the development of the primitive gut tube along its anterior-posterior (AP) axis. However, the genetic programs that control gut patterning along its dorsoventral (DV) axis have remained largely elusive. Results: We demonstrate that the activation of the Notch receptor occurs in a single row of boundary cells which separates dorsal from ventral cells in the Drosophila hindgut. rhomboid, which encodes a transmembrane protein, and knirps/knirps-related, which encode nuclear steroid receptors, are Notch target genes required for the expression of crumbs, which encodes a transmembrane protein involved in organizing apical-basal polarity. Notch receptor activation depends on the expression of its ligand Delta in ventral cells, and localizing the Notch receptor to the apical domain of the boundary cells may be required for proper signaling. The analysis of gene expression mediated by a Notch response element suggests that boundary cell-specific expression can be obtained by cooperation of Suppressor of Hairless and the transcription factor Grainyhead or a related factor. Conclusions: Our results demonstrate that Notch signaling plays a pivotal role in determining cell fates along the DV axis of the Drosophila hindgut. The finding that Notch signaling results in the expression of an apical polarity organizer which may be required, in turn, for apical Notch receptor localization suggests a simple mechanism by which the specification of a single cell row might be controlled.