The compound eye of the fruit fly, Drosophila melanogaster, is a useful model system for investigating the issues that underlie cell fate specification. More than a decade ago, Tomlinson and Ready proposed that the cells within the fly eye make use of a combinatorial code of signals in adopting specific cellular identities. This concept has driven our effort to understand how the individual facets of the fly eye are assembled (Ready et al. 1976; Tomlinson 1985). The attraction of the fly eye as an experimental system also rests within its simple adult structure along with its precise and stereotyped development. This is, of course, coupled to the extraordinary power of Drosophila genetic techniques to discover genes (the genes mentioned in this chapter are summarized in Table 1). We will attempt to summarize what is known about the molecular development of the first (R8) and last (R7) photoreceptors to join the developing unit eye or ommatidia. We are focusing on these two cells, in part, because the molecules and mechanisms that underlie their development are the best understood. The mechanisms used by these two cells, a proneural one for R8 and an inductive one for R7, are repeatedly used during development. Lessons learned from the development of these two cells have considerable implications for other experimental systems.