Intercellular signaling through the EGF receptor (EGFR) patterns the Drosophila egg. The TGF alpha-like ligand Gurken signals from the oocyte to the receptor in the overlying somatic follicle cells. We show that in the dorsal follicle cells this initial paracrine signaling event triggers an autocrine amplification by two other EGFR ligands, Spitz and Vein. Spitz only becomes an effective ligand in the presence of the multitransmembrane domain protein Rhomboid. Consequent high-level EGFR activation leads to localized expression of the diffusible inhibitor Argos, which alters the profile of signaling. This sequential activation, amplification, and local inhibition of the EGFR forms an autoregulatory cascade that leads to the splitting of an initial single peak of signaling into two, thereby patterning the egg.