Although Hedgehog (Hh) signaling is essential for morphogenesis of the Drosophila eye, its exact link to the network of tissue-specific genes that regulate retinal determination has remained elusive. In this report, we demonstrate that the retinal determination gene eyes absent (eya) is the crucial link between the Hedgehog signaling pathway and photoreceptor differentiation. Specifically, we show that the mechanism by which Hh signaling controls initiation of photoreceptor differentiation is to alleviate repression of eya and decapentaplegic (dpp) expression by the zinc-finger transcription factor Cubitus interruptus (Ci(rep)). Furthermore, our results suggest that stabilized, full length Ci (Ci(act)) plays little or no role in Drosophila eye development. Moreover, while the effects of Hh are primarily concentration dependent in other tissues, hh signaling in the eye acts as a binary switch to initiate retinal morphogenesis by inducing expression of the tissue-specific factor Eya.
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