Fig. 5. Positional signals and regulatory gene expression. (A) Cell autonomous responses of Atonal and Hairy expression to Dpp, Hh and N signal reception as inferred from our results, illustrating the roles of Ci155 and Ci75. Positive and negative interactions do not imply that direct molecular interactions between proteins or between proteins and genes have been demonstrated, only that interactions occur within the same cell without further intercellular signals. Ci75 must repress Ato since mutation of smo imposes a delay on differentiation that is released by deleting ci. Ci155 must activate Ato since Mad Su(H) cells differentiate but Mad Su(H) ci cells do not. Tkv must activate Ato independently of Ci because ci cells differentiate normally but tkv ci and Mad ci cells do not. Tkv is shown inhibiting Ci75, because Tkv promotes Ci155 accumulation in smo-mutant cells; this Ci155 is presumed to be inactive. Tkv also promotes Ci155 accumulation in cells not mutant for smo. Hairy has been shown previously to repress Ato function (Brown et al., 1995). Ci155 must repress Hairy as Hairy is maintained cell autonomously by Mad Su(H) ci-mutant cells but can be downregulated by Mad Su(H) cells. N must repress Hairy as Hairy is maintained cell autonomously by Mad Su(H) ci-mutant cells but can be downregulated by Mad ci cells. N may activate Atonal independently of Hairy as well, because the furrow progresses faster through Su(H)-mutant clones where Hairy is still expressed (Li and Baker, 2001). Hairy expression must be initiated in part by another signal, although Dpp has an input, as revealed by the quantitative reduction of Hairy levels in cells mutant for tkv (Greenwood and Struhl, 1999) and Mad, and all their combinations with Su(H) and ci. The network accounts for all the mutant phenotypes. In the absence of Ci, normal differentiation occurs in response to Dpp and N. In the absence of smo, differentiation is delayed because activation pathways through Ci155 are lost but repression by Ci75 retained. In the absence of both Dpp and N, differentiation occurs in response to Hh. Absence of either tkv or N alone has little effect, reflecting either the dominant role of Hh, or perhaps that both positive and negative inputs are lost in each case. (B) Extracellular signaling to Atonal and Hairy. Hh, Dl and Dpp are shown at the locations of their expression. The signal acting most anteriorly to the morphogenetic furrow is Dpp. Dpp is expressed at the anterior of the morphogenetic furrow in response to Hh. Dpp promotes Hairy expression. More posteriorly, Dpp synergizes with the relatively indiffusible Dl signal to induce Atonal. Dl is expressed in response to Atonal, and later in response to activation of Egfr by ligands produced by Atonal-dependent R8 cells. Hh also induces Atonal through the Ci155/Ci75 ratio. Hh is secreted by photoreceptor cells specified by Egfr activation by ligands produced by Atonal-dependent R8 cells. Both N and Hh downregulate Hairy. Despite intrinsically different ranges of Dpp and Hh signals, their activation of Ato coincides because Dpp also elevates Hairy, which must be downregulated by Hh or Dl.