Determination of cell fate in the developing eye of Drosophila depends on cellular interactions. In the eye imaginal disc, an initially unpatterned epithelial sheath of cells, single cells are specified in regular intervals to become the R8 photoreceptor cells. Genes such as Notch and scabrous participate in this process suggesting that specification of ommatidial founder cells and the formation of bristles in the adult epidermis involve a similar mechanism known as lateral inhibition. The subsequent steps of ommatidial assembly involve a different mechanism: undetermined cells read their position based on the contacts they make with neighbors that have already begun to differentiate. The development of the R7 photoreceptor cell is best understood. The key role seems to be played by sevenless, a receptor tyrosine kinase on the surface of the R7 precursor. It transmits the positional information--most likely encoded by boss on the neighboring R8 cell membrane--into the cell via its tyrosine kinase that activates a signal transduction cascade. Two components of this cascade--Sos and sina--have been identified genetically. sina encodes a nuclear protein whose expression is not limited to R7. Constitutive activation of the sevenless kinase by overexpression results in the diversion of other ommatidial cells into the R7 pathway, suggesting that activation of the sevenless signalling pathway is sufficient to specify R7 development.