Organ formation requires a delicate balance of positive and negative regulators. In Drosophila eye development, wingless (wg) is expressed at the lateral margins of the eye disc and serves to block retinal development. The T-box gene optomotor-blind (omb) is expressed in a similar pattern and is regulated by Wg. Omb mediates part of Wg activity in blocking eye development. Omb exerts its function primarily by blocking cell proliferation. These effects occur predominantly in the ventral margin. Our results suggest that the primary effect of Omb is the blocking of Jak/STAT signaling by repressing transcription of upd which encodes the Jak receptor ligand Unpaired.