Cell-cell communication directs the development of photoreceptor cells in the Drosophila retina. A recent set of studies has provided a genetic dissection of one of these interactions, the induction of the R7 photoreceptor cell by the neighboring R8 photoreceptor cell. The results from these experiments shape our understanding of both the molecular basis of signal transduction mediated through receptor tyrosine kinases, as well as the developmental strategies used to generate different cell types in neuronal systems.