Drosophila seven-up is an orphan receptor of the steroid receptor family that is required to specify photoreceptor neuron subtypes in the developing compound eye. Expression of seven-up is confined to four of the eight photoreceptor precursors, R3/R4/R1/R6. We show that misexpression of seven-up in any of the other cell types within the developing ommatidium interferes with their differentiation. Each cell type responds differently to seven-up misexpression. For example, ectopic expression in the non-neuronal cone cells using the sevenless promoter/enhancer (sev-svp) causes the cone cells to take on a neuronal identity. Ectopic expression of seven-up in R2/R5 using the rough enhancer (ro-svp) causes these neurons to lose aspects of their photoreceptor subtype identity while remaining neuronal. Each cell type appears to have a different developmental time window that is sensitive to misexpressed seven-up. The temporal order of responsiveness of each cell type to misexpressed seven-up is similar but not identical to the order of neuronal differentiation. This suggests that there are processes of specification that are distinct from the specification to become a photoreceptor neuron. We have identified members of the ras signaling pathway as suppressors of the cone cell to R7 neuron transformation caused by sev-svp. Suppression of the sev-svp phenotype can be achieved by decreasing the gene-dosage of any of the members of the ras-pathway. This suggests that the function of seven-up in the cone cells requires ras signaling. However, a decrease in ras signaling results in enhancement of the phenotype caused by the ro-svp transgene. We discuss the relationship between decisions controlled by seven-up and those controlled by ras signaling.