The LIM-homeodomain (LIM-HD) family member Lmx1a has been successfully used to induce dopaminergic neurons from other cell types, thus showing significant implications in replacement therapies of Parkinson's disease, but the underlying mechanism remains elusive. In this study, we used Drosophila eye as a model system to investigate how forced expression of dLmx1a, the fly homolog of human Lmx1a, alters cell identify. We found that ectopic expression of dLmx1a suppresses the formation of Drosophila eye tissue and identified the LIM and HD as two essential domains. dLmx1a requires and physically binds to Chip, a well-known cofactor of LIM-HD proteins. Chip connects two dLmx1a proteins to form a functional tetrameric complex. In addition, we provide evidence showing that dLmx1a expression results in the suppression of two retina determination gene eyes absent (eya) and string (stg). Taken together, our findings identified Chip as a novel partner of dLmx1a to alter cell differentiation in Drosophila eye through repressing eya and stg expression, and provide an animal model for further understanding the molecular mechanism whereby Lmx1a determines cell fate.