The signal transduction pathway controlling determination of the identity of the R7 photoreceptor in the Drosophila eye is shown to harbor high levels of naturally occurring genetic variation. The number of ectopic R7 cells induced by the dosage-sensitive SevS11.1 transgene that encodes a mildly activated form of the Sevenless tyrosine kinase receptor is highly sensitive to the wild-type genetic background. Phenotypes range from complete suppression to massive overproduction of photoreceptors that exceeds reported effects of known single gene modifiers, and are to some extent sex-dependent. Signaling from the dominant gain-of-function Drosophila Epidermal Growth Factor Receptor (DER-Ellipse) mutations is also sensitive to the genetic backgrounds, but there is no correlation with the effects on SevS11.1. This implies that different genes and/or alleles modify the two activated receptor genotypes. The evolutionary significance of the existence of high levels of genetic variation in the absence of normal phenotypic variation is discussed.