In Drosophila, pattern formation at multiple stages of embryonic and imaginal development depends on the same intercellular signaling pathways. We have identified a novel gene, eyelid (eld), which is required for embryonic segmentation, development of the notum and wing margin, and photoreceptor differentiation. In these tissues, eld mutations have effects opposite to those caused by wingless (wg) mutations. eld encodes a widely expressed nuclear protein with a region homologous to a novel family of DNA-binding domains. Based on this homology and on the phenotypic analysis, we suggest that Eld could act as a transcription factor antagonistic to the Wg pathway.

Decapentaplegic (dpp) regulates many aspects of imaginal disc growth and patterning in Drosophila. We have analyzed the phenotype of an eye-specific dpp allele, dppblk, which causes a reduction in the size of the retina due to a loss of ventral ommatidia. Prior to the onset of differentiation, dppblk eye discs are normal regarding size, shape, and ability to express dorsal and ventral markers. However, expression of a dpp-lacZ reporter is reduced at the ventral margin. Additional dorsoventral asymmetry appears during retinal differentiation: the morphogenetic furrow (MF) initiates normally at the posterior tip of the disc, but fails to propagate into the ventral epithelium. This defect can be rescued by increasing dpp expression along the ventral margin by local removal of patched function. We propose that the primary defect in dppblk is an inability to activate dpp expression properly at the ventral margin. This has two consequences: it prevents initiation from the ventral margin, and it renders the ventral epithelium unresponsive to differentiation signals emanating from the MF.

Morphogenesis in the Drosophila retina initiates at the posterior margin of the eye imaginal disc by an unknown mechanism. Upon initiation, a wave of differentiation, its forward edge marked by the morphogenetic furrow (MF), proceeds anteriorly across the disc. Progression of the MF is driven by hedgehog (hh), expressed by differentiating photoreceptor cells. The TGF-beta homolog encoded by decapentaplegic (dpp) is expressed at the disc's posterior margin prior to initiation and in the furrow, under the control of hh, during MF progression. While dpp has been implicated in eye disc growth and morphogenesis, its precise role in retinal differentiation has not been determined. To address the role of dpp in initiation and progression of retinal differentiation we analyzed the consequences of reduced and increased dpp function during eye development. We find that dpp is not only required for normal MF initiation, but is sufficient to induce ectopic initiation of differentiation. Inappropriate initiation is normally inhibited by wingless (wg). Loss of dpp function is accompanied by expansion of wg expression, while increased dpp function leads to loss of wg transcription. In addition, dpp is required to maintain, and sufficient to induce, its own expression along the disc's margins. We postulate that dpp autoregulation and dpp-mediated inhibition of wg expression are required for the coordinated regulation of furrow initiation and progression. Finally, we show that in the later stages of retinal differentiation, reduction of dpp function leads to an arrest in MF progression.