The sevenless protein tyrosine kinase receptor plays a central role in the pathway of cell fate induction that determines the development of the R7 photoreceptor in the Drosophila eye. In the last year we have learned much about the probable ligand for sevenless and have begun to dissect the signal transduction pathway that relays the information from the sevenless kinase. Studies of the mechanisms governing the specificity of signal transmission and reception suggest that the sevenless signal directs a bipotential cell towards a neuronal rather than a cone cell fate.