We have examined the generation and development of glial cells in the first optic ganglion, the lamina, of Drosophila melanogaster. Previous work has shown that the growth of retinal axons into the developing optic lobes induces the terminal cell divisions that generate the lamina monopolar neurons. We investigated whether photoreceptor ingrowth also influences the development of lamina glial cells, using P element enhancer trap lines, genetic mosaics and birthdating analysis. Enhancer trap lines that mark the differentiating lamina glial cells were found to require retinal innervation for expression. In mutants with only a few photoreceptors, only the few glial cells near ingrowing axons expressed the marker. Genetic mosaic analysis indicates that the lamina neurons and glial cells are readily separable, suggesting that these are derived from distinct lineages. Additionally, BrdU pulse-chase experiments showed that the cell divisions that produce lamina glia, unlike those producing lamina neurons, are not spatially or temporally correlated with the retinal axon ingrowth. Finally, in mutants lacking photoreceptors, cell divisions in the glial lineage appeared normal. We conclude that the lamina glial cells derive from a lineage that is distinct from that of the L-neurons, that glia are generated independently of photoreceptor input, and that completion of the terminal glial differentiation program depends, directly or indirectly, on an inductive signal from photoreceptor axons.