Abstract The gastroesophageal junction (GEJ), where squamous and columnar epithelia meet, is a hotspot for Barrett’s metaplasia development, dysbiosis and carcinogenesis. However, the mechanisms regulating GEJ homeostasis remain unclear. Here, by employing organoids, bulk and single-cell transcriptomics, single-molecule RNA in situ hybridisations and lineage tracing, we identified the spatial organisation of the epithelial, stromal compartment and the regulators that maintain the normal GEJ homeostasis. During development, common KRT8 progenitors generate committed unilineage p63/KRT5-squamous and KRT8-columnar stem cells responsible for the regeneration of postnatal esophagus and gastric epithelium that meet at GEJ. A unique spatial distribution of Wnt regulators in the underlying stromal compartment of these stem cells creates diverging Wnt microenvironments at GEJ and supports their differential regeneration. Further, we show that these tissue-resident stem cells do not possess the plasticity to transdifferentiate to the other lineage with the altered Wnt signals. Our study provides invaluable insights into the fundamental process of GEJ homeostasis and is crucial for understanding disease development.