Signals from directly adjacent cells are critical for the development of the R7 photoreceptor cell in the Drosophila eye. We have identified a gene, seven in absentia (sina), for which loss of function results in the R7 precursor cell adopting the fate of a nonneuronal cell type. Function of the sina gene is required only in R7 for correct R7 cell development. The sina transcription unit is located within the intron of a gene that encodes an R7 cell-specific opsin. The sina protein, which has a potential metal binding domain, is localized in the nuclei of several ommatidial precursor cells including R7, and sina expression in R7 appears before R7 overtly begins to differentiate. These data indicate that the sina gene product is necessary at a stage in the determination of R7 cell fate when R7 receives and interprets developmental signals from neighboring cells, and possibly acts by regulating gene expression.