The stereotyped pattern of Drosophila wing veins is determined by the action of two morphogens, Hedgehog (Hh) and Decapentaplegic (Dpp), which act sequentially to organize growth and patterning along the anterior-posterior axis of the wing primordium. An important unresolved question is how positional information established by these morphogen gradients is translated into localized development of morphological structures such as wing veins in precise locations. In the current study, we examine the mechanism by which two broadly expressed Dpp signaling target genes, optomotor-blind (omb) and brinker (brk), collaborate to initiate formation of the fifth longitudinal (L5) wing vein. omb is broadly expressed at the center of the wing disc in a pattern complementary to that of brk, which is expressed in the lateral regions of the disc and represses omb expression. We show that a border between omb and brk expression domains is necessary and sufficient for inducing L5 development in the posterior regions. Mosaic analysis indicates that brk-expressing cells produce a short-range signal that can induce vein formation in adjacent omb-expressing cells. This induction of the L5 primordium is mediated by abrupt, which is expressed in a narrow stripe of cells along the brk/omb border and plays a key role in organizing gene expression in the L5 primordium. Similarly, in the anterior region of the wing, brk helps define the position of the L2 vein in combination with another Dpp target gene, spalt. The similar mechanisms responsible for the induction of L5 and L2 development reveal how boundaries set by dosage-sensitive responses to a long-range morphogen specify distinct vein fates at precise locations.