Different Drosophila photoreceptors (R cells) connect to neurons in different optic lobe layers. R1-R6 axons project to the lamina; R7 and R8 axons project to separate layers of the medulla. We show a receptor tyrosine phosphatase, PTP69D, is required for lamina target specificity. In Ptp69D mutants, R1-R6 project through the lamina, terminating in the medulla. Genetic mosaics, transgene rescue, and immunolocalization indicate PTP69D functions in R1-R6 growth cones. PTP69D overexpression in R7 and R8 does not respecify their connections, suggesting PTP69D acts in combination with other factors to determine target specificity. Structure-function analysis indicates the extracellular fibronectin type III domains and intracellular phosphatase activity are required for targeting. We propose PTP69D promotes R1-R6 targeting in response to extracellular signals by dephosphorylating substrate(s) in R1-R6 growth cones.