The Drosophila fat facets (faf) gene encodes a deubiquitination enzyme with a putative function in proteasomal protein degradation. Mutants lacking zygotic faf function develop to adulthood, but have rough eyes caused by the presence of one to two ectopic outer photoreceptors per ommatidium. Here we show that faf interacts genetically with the receptor tyrosine kinase (RTK)/Ras pathway, which induces photoreceptor differentiation in the developing eye. The results indicate that RTK/Ras signalling is increased in faf mutants, causing normally non-neuronal cells to adopt photoreceptor fate. Consistently, the protein level of at least one component of the Ras signal transduction pathway, the transcription factor D-Jun, is elevated in faf eye discs at the time when the ectopic photoreceptors are induced. We propose that defective ubiquitin-dependent proteolysis leads to increased and prolonged D-Jun expression, which together with other factors contributes to the induction of ectopic photoreceptors in faf mutants. These studies demonstrate the relevance of ubiquitin-dependent protein degradation in the regulation of RTK/Ras signal transduction in an intact organism.