The development of the mouse salivary gland involves a tip-driven process of branching morphogenesis that takes place in concert with differentiation into acinar, myoepithelial, and ductal (basal and luminal) sub-lineages. By combining clonal lineage tracing with a three-dimensional (3D) reconstruction of the branched epithelial network and single-cell RNA-seq analysis, we show that in tips, a heterogeneous population of renewing progenitors transition from a Krt14+ multipotent state to unipotent states via two transcriptionally distinct bipotent states, one restricted to the Krt14+ basal and myoepithelial lineage and the other to the Krt8+ acinar and luminal lineage. Using genetic perturbations, we show how the differential expression of Notch signaling correlates with spatial segregation, exits from multipotency, and promotes the Krt8+ lineage, whereas Kras activation promotes proacinar fate. These findings provide a mechanistic basis for how positional cues within growing tips regulate the process of lineage segregation and ductal patterning.