Activation of cell surface receptors transduces extracellular signals into cellular responses such as proliferation, differentiation and survival. However, as important as the activation of these receptors is their appropriate spatial and temporal down-regulation for normal development and tissue homeostasis. The Cbl family of E3-ubiquitin ligases plays a major role for the ligand-dependent inactivation of receptor tyrosine kinases (RTKs), most notably the Epidermal Growth Factor Receptor (EGFR) through ubiquitin-mediated endocytosis and lysosomal degradation.Here, we report the mutant phenotypes of Drosophila cbl (D-cbl) during eye development. D-cbl mutants display overgrowth, inhibition of apoptosis, differentiation defects and increased ommatidial spacing. Using genetic interaction and molecular markers, we show that most of these phenotypes are caused by increased activity of the Drosophila EGFR. Our genetic data also indicate a critical role of ubiquitination for D-cbl function, consistent with biochemical models.These data may provide a mechanistic model for the understanding of the oncogenic activity of mammalian cbl genes.