We have identified a novel Drosophila gene, DRacGAP, which behaves as a negative regulator of Ρ-family GTPases DRac1 and DCdc42. Reduced function of DRacGAP or increased expression of DRac1 in the wing imaginal disc cause similar effects on vein and sensory organ development and cell proliferation. These effects result from enhanced activity of the EGFR/Ras signalling pathway. We find that in the wing disc, DRac1 enhances EGFR/Ras-dependent activation of MAP Kinase in the prospective veins. Interestingly, DRacGAP expression is negatively regulated by the EGFR/Ras pathway in these regions. During vein formation, local DRacGAP repression would ensure maximal activity of Rac and, in turn, of Ras pathways in vein territories. Additionally, maximal expression of DRacGAP at the vein/intervein boundaries would help to refine the width of the veins. Hence, control of DRacGAP expression by the EGFR/Ras pathway is a previously undescribed feedback mechanism modulating the intensity and/or duration of its signalling during Drosophila development.