The spatial and temporal coordination of patterning and morphogenesis is often achieved by paracrine morphogen signals or by the direct coupling of cells via gap junctions. How paracrine signals and gap junction communication cooperate to control the coordinated behavior of cells and tissues is mostly unknown. We found that hedgehog signaling is required for the expression of wingless and of Delta/Notch target genes in a single row of boundary cells in the foregut-associated proventriculus organ of the Drosophila embryo. These cells coordinate the movement and folding of proventricular cells to generate a multilayered organ. hedgehog and wingless regulate gap junction communication by transcriptionally activating the innexin2 gene, which encodes a member of the innexin family of gap junction proteins. In innexin2 mutants, gap junction-mediated cell-to-cell communication is strongly reduced and the proventricular cell layers fail to fold and invaginate, similarly as in hedgehog or wingless mutants. We further found that innexin2 is required in a feedback loop for the transcriptional activation of the hedgehog and wingless morphogens and of Delta in the proventriculus primordium. We propose that the transcriptional cross regulation of paracrine and gap junction-mediated signaling is essential for organogenesis in Drosophila.