The number of seeds a plant produces depends on the number of ovules initiated within the carpels by meristematic tissue called the placenta. Previous studies indicated that ERECTA-LIKE1 (ERL1) and ERL2 receptors and their extracellular ligand EPIDERMAL PATTERNING FACTOR-LIKE2 (EPFL2) promote ovule initiation. Here, we expand this regulatory network by demonstrating that in Arabidopsis (Arabidopsis thaliana), ERECTA, EPFL1, and the transcription factor CUP-SHAPED COTYLEDON3 (CUC3) also contribute to this process. We further identify a role for EPFL1 and EPFL2 in redundantly promoting ovule elongation and funiculus growth. To investigate early ovule development, we analyzed spatial gene expression using reporter lines. Our data show that ovule initiation begins with the specification of founder cells, separated by boundary cells, followed by the emergence of a highly proliferative cell population between them during ovule bulging. In the epfl1 epfl2 mutant, founder and boundary cell markers overlap, indicating impaired cell fate separation. These findings suggest that EPFL signaling is essential for establishing distinct cell identities during ovule initiation and later supports the formation of a proliferative zone at the ovule base. Our results show that DORNROESCHEN (DRN), a marker of ovule founder cells, is negatively regulated by EPFLs and acts downstream of them to restrict funiculus elongation.