We have examined the influence of retinal innervation on the development of target neurons in the first optic ganglion, the lamina, of D. melanogaster. Mitotically active lamina precursor cells (LPCs), which normally produce lamina neurons, are absent in mutants that lack retinal innervation, while other proliferative centers appear unaffected. Reducing the number of innervating photoreceptor axons results in fewer mitotic LPCs. In glass mutants photoreceptors project to abnormal locations and LPCs are found adjacent to these aberrant projections. We conclude that the arrival of photoreceptor axons in the larval brain initiates, directly or indirectly, cell division to produce lamina neurons. Our results provide an explanation for how the synchronous development of these two interacting systems is coordinated.