During Drosophila ommatidial development, a single cell is selected within the ommatidial cluster to become the R7 photoreceptor neuron. The seven-up gene has been shown to play a role in this process by preventing four other photoreceptor precursors, R3/R4/R1/R6, from adopting the R7 cell fate. The seven-up gene encodes a steroid receptor-like molecule that is expressed only in those four cells that require seven-up function in the developing Drosophila ommatidium. We have examined the functional significance of the spatially restricted expression of seven-up by misexpressing seven-up isoforms. As expected from the function that seven-up performs in R3/R4/R1/R6, ubiquitous expression of seven-up causes transformation of the R7 cell to an R1-R6 cell fate. In addition, depending on the timing and spatial pattern of expression, various other phenotypes are produced including the loss of the R7 cell and the formation of extra R7 cells. Ubiquitous expression of seven-up close to the morphogenetic furrow interferes with R8 differentiation resulting in failure to express the boss protein, the ligand for the sevenless receptor tyrosine kinase, and the R7 cell is lost consequently. Extra R7 cells are formed by recruiting non-neuronal cone cells as photoreceptor neurons in a sevenless and bride of sevenless independent way. Thus, the spatiotemporal pattern of seven-up expression plays an essential role in controlling the number and cellular origin of the R7 neuron in the ommatidium. Our results also suggest that seven-up controls decisions not only between photoreceptor subtypes, but also between neuronal and non-neuronal fates.