Fetal lymphoid tissue inducer (LTi) cells are required for lymph node and Peyer's patch (PP) organogenesis, but where these specialized group 3 innate lymphoid cells (ILC3s) develop remains unclear. Here, we identify extrahepatic arginase-1⁺ Id2⁺ fetal ILC precursors that express a transitional developmental phenotype (ftILCPs) and differentiate into ILC1s, ILC2s and ILC3s in vitro. These cells populate the intestine by embryonic day (E) 13.5 and, before PP organogenesis (E14.5–15), are broadly dispersed in the proximal gut, correlating with regions where PPs first develop. At E16.5, after PP development begins, ftILCPs accumulate at PP anlagen in a lymphotoxin-α–dependent manner. Thus, ftILCPs reside in the intestine during PP development, where they aggregate at PP anlagen after stromal cell activation and become a localized source of ILC populations.