The differentiation of multipotential progenitor cells in the vertebrate retina into photoreceptors, neurons and glial cells is regulated in part by cell-cell signalling. Transforming growth factor (TGF)-alpha is one of the extracellular signals implicated in the control of several aspects of retinal development, including proliferation and cell fate. The way cells interpret pleiotropic signals such as TGF-alpha is influenced by the level of expression of epidermal growth factor receptor (EGF-R) in some cell lines. To address the influence of receptor level on responses of retinal progenitor cells to TGF-alpha, additional copies of EGF-Rs were introduced in vitro and in vivo with a retrovirus. Normally in vitro, low concentrations of TGF-alpha stimulated proliferation whereas high concentrations biased choice of cell fate, inhibiting differentiation into rod photoreceptors while promoting differentiation into Müller glial cells. We report here that introduction of extra EGF-Rs into progenitor cells in vitro reduced the concentration of TGF-alpha required for changes in rod and Müller cell differentiation but did not enhance proliferation. Introduction of extra EGF-Rs in vivo increased the proportion of clones that contained Müller glial cells, suggesting that receptor level is normally limiting. These findings demonstrate that responsiveness to extracellular signals during development can be modulated by the introduction of additional receptors, and suggest that the level of expression of receptors for these signals contributes to the regulation of cell fate.