The Drosophila eye is composed of several hundred ommatidia that can exist in either of two chiral forms, depending on position: ommatidia in the dorsal half of the eye adopt one chiral form, whereas ommatidia in the ventral half adopt the other. Chirality appears to be specified by a polarizing signal with a high activity at the interface between the two halves (the ‘equator’), which declines in opposite directions towards the dorsal and ventral poles. Here, using genetic mosaics, we show that this polarizing signal is decoded by the sequential use of two receptor systems. The first depends on the seven-transmembrane receptor Frizzled (Fz) and distinguishes between the two members of the R3/R4 pair of presumptive photoreceptor cells, predisposing the cell that is located closer to the equator and having higher Fz activity towards the R3 photoreceptor fate and the cell further away towards the R4 fate. This bias is then amplified by subsequent interactions between the two cells mediated by the receptor Notch (N) and its ligand Delta (Dl), ensuring that the equatorial cell becomes the R3 photoreceptor while the polar cell becomes the R4 photoreceptor. As a consequence of this reciprocal cell fate decision, the R4 cell moves asymmetrically relative to the R3 cell, initiating the appropriate chiral pattern of the remaining cells of the ommatidium.