We report that mutations at the Star locus act as dominant enhancers of the eye phenotype displayed by flies carrying a null allele of rough. Our analysis of double mutants at different stages of eye development suggests that this phenotype results from defects in the early stages of photoreceptor cell differentiation in the eye imaginal disc. Complete loss of Star function during retinal development, analyzed in mosaic animals, results in cell death, visible as scars in the adult eye. The requirement for wild-type Star function, however, is confined to only a subset of photoreceptor cells, R8, R2, and R5, which are the first three cells to differentiate neurally in the developing retina. These results suggest an essential role for the Star gene in the initial events of ommatidial cluster formation during the development of the Drosophila compound eye.