hth maintains the pool of eye progenitors and its downregulation by Dpp and Hh couples retinal fate acquisition with cell cycle exit.

During Drosophila eye development, recruitment of retinal precursors from a pool of progenitor cells is tightly coupled to proliferation control. However, how this coupling operates is still unclear. Here we show that the transcription factor hth, together with eyeless, is required to stimulate proliferation of progenitor cells. Accordingly, knocking down hth expression results in severely reduced eyes. Our experiments reveal three additional functions for hth: the cell cycle of progenitors is characterized by a relatively long G2 phase, which makes them prone to enter mitosis; hth represses the burst of string/cdc25 expression that precedes G1 arrest, and also the early expression of the proneural gene atonal. Thereby, hth maintains the proliferative and undifferentiated state of eye progenitors. Furthermore, we show that the G1 synchronization that characterizes retinal precursors is the result of the spatially controlled repression of hth by Dpp and Hh, and not of an actively induced cell cycle arrest. We integrate these results in a model of the early steps of eye development that links proliferation control and differential gene expression with patterning signals.