Phospholipase C-(gamma) (PLC-(gamma)) is activated in many cell types following growth factor stimulation. Our understanding of the role of PLC-(gamma) in cell growth and differentiation has been severely limited by the dearth of mutations in any organism. In this study, we show that the Drosophila gene small wing (sl), identified by Bridges in 1915, encodes a PLC-(gamma). Mutations of sl result in extra R7 photoreceptors in the compound eye, consistent with overactivation of the receptor tyrosine kinase pathways that control R7 development. The data presented here provide the first genetic evidence that PLC-(gamma) is involved in Ras-mediated signaling and indicate that PLC-(gamma) acts as a negative regulator in such pathways in Drosophila.