Specification of the R7 cell fate in the developing Drosophila eye requires activation of the Sevenless (Sev) receptor tyrosine kinase, located on the surface of the R7 precursor cell, by its interaction with the Boss protein, expressed on the surface of the neighbouring R8 cell. Four genes that participate in the intracellular transmission of this signal have so far been identified and molecularly characterized: Ras1, Sos, Gap1 and sina (refs 4-8). The Drosophila homologue of the mammalian Raf-1 serine/threonine kinase, which has been implicated in signal transduction pathways activated by many receptor tyrosine kinases (reviewed in refs 9 and 10), is encoded by the raf locus (also known as l(1)polehole, Draf-1 or Draf). Here we show that the Drosophila Raf serine/threonine kinase also plays a crucial role in the R7 pathway: the response to Sev activity is dependent on raf function, and a constitutively activated Raf protein can induce R7 cell development in the absence of sev function. We also present genetic evidence suggesting that Raf acts downstream of Ras1 and upstream of Sina in this signal transduction cascade.