A key event in patterning the developing Drosophila compound eye is the progressive restriction of the transcription factor Atonal in the morphogenetic furrow. The Atonal pattern evolves from expression in all cells to an over-dispersed pattern of single founder cells (the future R8 photoreceptors). This restriction involves Notch-mediated lateral inhibition. However, there have been inconsistent data on a similar proposed role for the Egf receptor (Egfr). Experiments using a conditional Egfr mutation (Egfr(tsla)) suggested that Egfr does not regulate Atonal restriction, whereas experiments using Egfr-null mosaic Minute+ clones suggested that it does. Here, we have re-examined both approaches. We report that the lesion in Egfr(tsla) is a serine to phenylalanine change in a conserved extracellular ligand-binding domain. We show by biochemical and genetic approaches that the Egfr(tsla) protein is rapidly and completely inactivated upon shift to the non-permissive temperature. We also find that on temperature shift the protein moves from the cell surface into the cell. Finally, we report a flaw in the Egfr-null mosaic Minute+ clone approach. Thus, we demonstrate that Egfr does not play a role in the initial specification or spacing of ommatidial founder cells.