During Drosophila retinal development, the R8 photo-receptor neuron induces a neighboring cell to assume an R7 cell fate through cell contact. This is mediated by the transmembrane protein bride of sevenless (boss) on the surface of the R8 cell, which binds the sevenless tyrosine kinase receptor (sev) on the surface of the R7 precursor cell. The boss protein, which contains a large extracellular domain, seven transmembrane segments, and a C-terminal cytoplasmic domain, has an exceptional structure for a ligand of a receptor tyrosine kinase. Using a panel of antibodies directed to various cytoplasmic and extracellular epitopes, we demonstrate that the entire boss protein from its extreme N-terminus to its extreme C-terminus is internalized by sev-expressing tissue culture cells and by the R7 precursor cell in the developing eye imaginal disc. The receptor-mediated transfer of a transmembrane ligand represents a novel mechanism for protein transfer between developing cells.