AbstractNervous systems of higher organisms are comprised of a variety of cell types which are interconnected in a precise manner. The molecular mechanisms that lead to the specification of neuronal cell types are not well understood. The compound eye of the fruit fly Drosophila is an attractive experimental system to understand these mechanism. The compound eye is a reiterated neural pattern with several hundred unit structures and is amenable to both classical and molecular genetic methods. During the development of the compound eye cell–cell interactions and positional information play a critical role in the determination of cell fate. Recent genetic and molecular studies have provided important clues regarding the nature of the molecules involved in cellular signalling and neuronal differentiation. © 1993 John Wiley & Sons, Inc.