Cell proliferation and cell type specification are coordinately regulated during normal development. Cyclin E, a key G1/S cell cycle regulator, is regulated by multiple tissue-specific enhancers resulting in dynamic expression during Drosophila development. Here, we further characterized the enhancer that regulates cyclin E expression in the developing peripheral nervous system (PNS) and show that multiple sequence elements are required for the full cyclin E PNS enhancer activity. We further show that Wg signaling is important for the expression of cyclin E in the sensory organ precursor (SOP) cells through two conserved TCF binding sites. Blocking Wg signaling does not completely block SOP cell formation but does completely block SOP cell proliferation as well as the subsequent differentiation.