How cell to cell interactions control local tissue growth to attain a species-specific organ size is a central question in developmental biology. The Drosophila Neural Cell Adhesion Molecule, Fasciclin 2, is expressed during the development of neural and epithelial organs. Fasciclin 2 is a homophilic-interaction protein that shows moderate levels of expression in the proliferating epithelia and high levels in the differentiating non-proliferative cells of imaginal discs. Genetic interactions and mosaic analyses reveal a cell autonomous requirement of Fasciclin 2 to promote cell proliferation in imaginal discs. This function is mediated by the EGFR, and indirectly involves the JNK and Hippo signaling pathways. We further show that Fasciclin 2 physically interacts with EGFR and that, in turn, EGFR activity promotes the cell autonomous expression of Fasciclin 2 during imaginal disc growth. We propose that this auto-stimulatory loop between EGFR and Fasciclin 2 is at the core of a cell to cell interaction mechanism that controls the amount of intercalary growth in imaginal discs.