Cells rely on the ability to receive and interpret external signals to regulate growth, differentiation, and death. Positive transduction of these signals to the cytoplasm and nucleus has been extensively characterized, and genetic studies in Drosophila have made major contributions to the understanding of these pathways. Less well understood, but equally important, are the mechanisms underlying signal down-regulation. Here we report biochemical and genetic characterization of the Drosophila homologue of c-Cbl, a negative regulator of signal transduction with ubiquitin-protein ligase activity. A new isoform of D-Cbl, D-CblL, has been identified that contains SH3-binding and UBA domains previously reported to be absent. Genetic analysis demonstrates that Dv-cbl, analogous to the mammalian v-cbl oncogene, is a dominant negative mutation able to enhance signalling from the Drosophila Egfr and cooperate with activating mutations in the sevenless pathway to produce melanotic tumours. In addition, our data show genetic and biochemical links between D-Cbl and proteins involved in endocytosis and ubiquitination, suggesting that v-Cbl may exert its oncogenic effect by enhancing receptor signalling as a consequence of suppressing receptor endocytosis.