The eyeless, dachshund, and eyes absent genes encode conserved, nuclear proteins that are essential for eye development in Drosophila. Misexpression of eyeless or dachshund is also sufficient to induce the formation of ectopic compound eyes. Here we show that the dachshund and eyes absent genes act synergistically to induce ectopic retinal development and positively regulate the expression of each other. Moreover, we show that the Dachshund and Eyes Absent proteins can physically interact through conserved domains, suggesting a molecular basis for the genetic synergy observed and that a similar complex may function in mammals. We propose that a conserved regulatory network, rather than a linear hierarchy, controls retinal specification and involves multiple protein complexes that function during distinct steps of eye development.