Mutations that diminish the function of the extracellular matrix receptor Dystroglycan (DG) result in muscular dystrophies, with associated neuronal migration defects in the brain and mental retardation e.g. Muscle Eye Brain Disease. To gain insight into the function of DG in the nervous system we initiated a study to examine its contribution to development of the eye of Drosophila melanogaster. Immuno-histochemistry showed that DG is concentrated on the apical surface of photoreceptors (R) cells during specification of cell-fate in the third instar larva and is maintained at this location through early pupal stages. In point mutations that are null for DG we see abortive R cell elongation during differentiation that first appears in the pupa and results in stunted R cells in the adult. Overexpression of DG in R cells results in a small but significant increase in their size. R cell differentiation defects appear at the same stage in a deficiency line Df(2R)Dg(248) that affects Dg and the neighboring mitochondrial ribosomal gene, mRpL34. In the adult, these flies have severely disrupted R cells as well as defects in the lens and ommatidia. Expression of an mRpL34 transgene rescues much of this phenotype. We conclude that DG does not affect neuronal commitment but functions R cell autonomously to regulate neuronal elongation during differentiation in the pupa. We discuss these findings in view of recent work implicating DG as a regulator of cell metabolism and its genetic interaction with mRpL34, a member of a class of mitochondrial genes essential for normal metabolic function.