In an effort to identify the role of Rab11, a small GTP binding protein, during Drosophila differentiation, phenotypic manifestations associated with different alleles of Rab11 were studied. The phenotypes ranged from eye-defects, bristle abnormalities and sterility to lethality during various developmental stages. In this paper, our focus is targeted on eye defects caused by Rab11 mutations. A novel P-element insertion in the Rab11 locus, Rab11mo, displayed characteristic retinal anomalies, which could be reverted by P-element excision and expression of Rab11+ transgenes. During larval development, Rab11 is widely synthesized in photoreceptor cells and localizes to the rhabdomeres and lamina neuropil in adult eyes. Photoreceptors and associated bristles failed to be formed in homozygous clones generated in Rab11EP(3)3017 eyes. Decreased levels of Rab11 protein and increased cell death in Rab11mo third-instar larval eye-antennal discs suggest that the retinal defects originate during larval development. Our data indicate a requirement for Rab11 in ommatidial differentiation during Drosophila eye development.