Proliferating intestinal stem cells (ISCs) generate all cell types of the Drosophila midgut, including enterocytes, endocrine cells, and gland cells (e.g., copper cells), throughout the lifetime of the animal. Among the signaling mechanisms controlling the balance between ISC self-renewal and the production of different cell types, Notch (N) plays a pivotal role. In this paper we investigated the emergence of ISCs during metamorphosis and the role of N in this process. Precursors of the Drosophila adult intestinal stem cells (pISCs) can be first detected within the pupal midgut during the first hours after onset of metamorphosis as motile mesenchymal cells. pISCs perform 2-3 rounds of parasynchronous divisions. The first mitosis yields only an increase in pISC number. During the following rounds of mitosis, dividing pISCs give rise to more pISCs, as well as the endocrine cells that populate the midgut of the eclosing fly. Enterocytes do not appear among the pISC progeny until around the time of eclosion. The "proendocrine" gene prospero (pros), expressed from mid-pupal stages onward in pISCs, is responsible to advance the endocrine fate in these cells; following removal of pros, pISCs continue to proliferate, but endocrine cells do not form. Conversely, the onset of N activity that occurs around the stage when pros comes on restricts pros expression among pISCs. Loss of N abrogates proliferation and switches on an endocrine fate among all pISCs. Our results suggest that a switch depending on the activity of N and pros acts at the level of the pISC to decide between continued proliferation and endocrine differentiation.