Tissue heterogeneity permits diverse biological outputs in response to systemic signals but requires context-dependent spatiotemporal regulation of a limited number of signaling circuits. In addition to their stereotypical roles of transport and cargo sorting, endocytic networks provide rapid, adaptable, and often reversible means of signaling. Aberrant function of the Endosomal Sorting Complex Required for Transport (ESCRT) components results in ubiquitinated cargo accumulation, uncontrolled signaling and neoplastic transformation. However, context-specific effects of ESCRT on developmental decisions are not resolved. By a comprehensive spatiotemporal profiling of ESCRT in Drosophila hematopoiesis in vivo, here we show that pleiotropic ESCRT components have distinct effects on blood progenitor maintenance, lineage choice and response to immune challenge. Of all 13 core ESCRT components tested, only Vps28 and Vp36 were required in all progenitors, whereas others maintained spatiotemporally defined progenitor subsets. ESCRT depletion also sensitized posterior progenitors that normally resist differentiation, to respond to immunogenic cues. Depletion of the critical Notch signaling regulator Vps25 did not promote progenitor differentiation at steady state but made younger progenitors highly sensitive to wasp infestation, resulting in robust lamellocyte differentiation. We identify key heterotypic roles for ESCRT in controlling Notch activation and thereby progenitor proliferation and differentiation. Further, we show that ESCRT ability to regulate Notch activation depends on progenitor age and position along the anterior-posterior axis. The phenotypic range and disparity in signaling upon depletion of components provides insight into how ESCRT may tailor developmental diversity. These mechanisms for subtle control of cell phenotype may be applicable in multiple contexts.SignificanceThe Endosomal Sorting Complex Required for Transport (ESCRT) machinery sorts ubiquitinated cargo for degradation or recycling. Aberrant ESCRT function is associated with many blood disorders. We did a comprehensive functional analysis of all 13 core ESCRT components in maintenance and differentiation of Drosophila larval blood progenitors. We show that ESCRT have diverse and non-compensatory functions in blood progenitors. ESCRT depletion from progenitors affects ubiquitination status cell autonomously and independent of progenitor maintenance. ESCRT function is more critical to maintain older progenitors and to prevent Notch-dependent crystal cell differentiation. Further, ESCRT depletion sensitizes refractile younger progenitors for lamellocyte differentiation. Our in situ developmental map of ESCRT function reveals critical checkpoints for cell fate choice and new paradigms for generating progenitor heterogeneity.