The Drosophila eye is a useful model system in which to study pattern formation, cell differentiation and signaling. A genetic mosaic screen has been used to identify novel genes that mediate these processes in eye development. Several of the genes found in this screen influence signaling through the epidermal growth factor receptor (EGFR) pathway, which is upregulated in many human cancers, rasp encodes an acyltransferase that adds an essential palmitate modification to the secreted Hedgehog protein. Genetic evidence suggests that it also modifies ligands for the EGFR and that this modification is required for their function. This hypothesis will be tested and the way in which lipid modification affects the activity of secreted ligands will be investigated, mago nashi encodes a component of the exon junction complex that acts downstream of Ras activation to promote signaling through the EGFR pathway. The target for Mago function and the effect of Mago on the localization, stability or translation of this transcript will be investigated, myopic encodes a tyrosine phosphatase that acts downstream of the EGFR but upstream of Ras. The protein that is dephosphorylated by Myopic to promote EGFR signaling will be identified, aveugle, a new gene required for EGFR signaling, will also be cloned and characterized. The transcriptional coactivator Chip is required to prevent ectopic eyes from forming in a region of the eye disc that gives rise to head tissue. The partner protein for Chip and the target genes that it regulates to limit the eye field will be identified. Finally, our mosaic screen will be extended to the entire genome by screening the X chromosome for genes required for the normal pattern of photoreceptor differentiation. The novel genes found will be characterized at the molecular and phenotypic levels. On other chromosomes, this screen has identified components of signaling pathways, discovered specificity in subunits of transcriptional complexes, and defined new roles for cytoskeletal proteins. A screen of the X should also shed light on basic mechanisms in eye development.