Protein phosphatase 2A (PP2A), a heterotrimeric serine/threonine phosphatase present in most tissues and cell types, has been implicated in the regulation of cell cycle progression, DNA replication, transcription, and translation. Here we present genetic evidence suggesting that PP2A functions downstream of Ras1 in the Sevenless receptor tyrosine kinase (RTK) signal transduction pathway that specifies R7 photoreceptor cell fate in the developing Drosophila eye. Ras1 and downstream cytoplasmic kinases, Raf, MEK, and MAPK, comprise an evolutionarily conserved cascade that mediates the transmission of signals from RTKs at the plasma membrane to specific factors in the nucleus. Using transgenic flies expressing constitutively activated Ras1 or Raf proteins that function independently of upstream signaling events, we show that a reduction in the dose of the gene encoding the catalytic subunit of PP2A stimulates signaling from Ras1 but impairs signaling from Raf. This suggests that PP2A both negatively and positively regulates the Ras1 cascade by dephosphorylating factors that function at different steps in the cascade.