In most olfactory systems studied to date, neurons that express the same odorant receptor (Or) gene are scattered across sensory epithelia, intermingled with neurons that express different Or genes. In Drosophila, olfactory sensilla that express the same Or gene are dispersed on the antenna and the maxillary palp. Here we show that Or identity is specified in a spatially stereotyped pattern by the cell-autonomous activity of the transcriptional regulators Engrailed and Dachshund. Olfactory sensilla then become highly motile and disperse beneath the epidermis. Thus, positional information and cell motility underlie the dispersed patterns of Drosophila Or gene expression.