Drosophila yan has been postulated to act as an antagonist of the proneural signal mediated by the sevenless/Ras1/MAPK pathway. We have mutagenized the eight MAPK phosphorylation consensus sites of yan and examined the effects of overexpressing the mutant protein in transgenic flies and transfected S2 cultured cells. Our results suggest that phosphorylation by MAPK affects the stability and subcellular localization of yan, resulting in rapid down-regulation of yan activity. Furthermore, MAPK-mediated down-regulation of yan function appears to be critical for the proper differentiation of both neuronal and nonneuronal tissues throughout development, suggesting that yan is an essential component of a general timing mechanism controlling the competence of a cell to respond to inductive signals.