In multicellular organisms, a stringent control of the transition between cell division and differentiation is crucial for correct tissue and organ development. In the Arabidopsis root, the boundary between dividing and differentiating cells is positioned by the antagonistic interaction of the hormones auxin and cytokinin. Cytokinin affects polar auxin transport, but how this impacts the positional information required to establish this tissue boundary, is still unknown. By combining computational modeling with molecular genetics, we show that boundary formation is dependent on cytokinin's control on auxin polar transport and degradation. The regulation of both processes shapes the auxin profile in a well-defined auxin minimum. This auxin minimum positions the boundary between dividing and differentiating cells, acting as a trigger for this developmental transition, thus controlling meristem size.