Receptor tyrosine kinases (RTKs) control a wide variety of processes in multicellular organisms, including proliferation, differentiation, migration and survival. Their activity is tightly controlled through the coordinated action of both positive and negative regulators that function at multiple levels of the signal transduction cascade, and at different time points within the growth-factor-induced response. When this process goes awry, the outcome can be developmental defects and malignancy. Sprouty (Spry) proteins represent a major class of ligand-inducible inhibitors of RTK-dependent signaling pathways. New biochemical and genetic evidence indicates specific roles of the Spry genes in development and multiple modes of action of the Spry proteins in regulation of the RTK-induced response.