Sprouty was originally identified as an inhibitor of Drosophila FGF receptor signaling during tracheal development. By following the capacity of ectopic Sprouty to abolish the pattern of activated MAP kinase in embryos, we show that Sprouty can inhibit other receptor tyrosine kinase (RTK) signaling pathways, namely the Heartless FGF receptor and the EGF receptor. Similarly, in wing imaginal discs, ectopic Sprouty abolishes activated MAP kinase induced by the EGF receptor pathway. Sprouty expression is induced by the EGFR pathway in some, but not all, tissues in which EGFR is activated, most notably in follicle cells of the ovary, the wing imaginal disc and the eye disc. In the ovary, induction of sprouty expression follows the pattern of EGFR activation in the follicle cells. Generation of homozygous sprouty mutant follicle-cell clones demonstrates an essential role for Sprouty in restricting EGFR activation throughout oogenesis. At the stage when dorso-ventral polarity of the follicle cells is established, Sprouty limits the ventral expansion of the activating Gurken signal. Later, when dorsal appendage fates are determined, reduction of signaling by Sprouty facilitates the induction of inter-appendage cell fates. The capacity of Sprouty to reduce or eliminate accumulation of activated MAP kinase indicates that in vivo it intersects with the pathway upstream to MAP kinase. The ability of ectopic Sprouty to rescue lethality caused by activated Raf suggests that it may impinge upon the pathway by interacting with Raf or downstream to it.