Subdivision of the limb primordia of Drosophila into anterior and posterior compartments triggers cell interactions that pattern the legs and wings. A comparable compartment-based mechanism is used to pattern the dorsal-ventral axis of the wing. Evidence is presented here for a mechanism based on cell interaction, rather than on compartment formation, that distinguishes dorsal from ventral in the leg. Mutual repression by Wingless and Decapentaplegic signaling systems generates a stable regulatory circuit by which each gene maintains its own expression in a spatially restricted domain. Compartment-independent patterning mechanisms may be used by other organisms during development.