Trimethylguanosine synthase 1 (TGS1) is a conserved enzyme that mediates formation of the trimethylguanosine cap on several RNAs, including snRNAs and telomerase RNA. Previous studies have shown that TGS1 binds the Survival Motor Neuron (SMN) protein, whose deficiency causes spinal muscular atrophy (SMA). Here, we analyzed the roles of the Drosophila orthologs of the human TGS1 and SMN genes. We show that the Drosophila TGS1 protein (dTgs1) physically interacts with all subunits of the Drosophila Smn complex (Smn, Gem2, Gem3, Gem4 and Gem5), and that a human TGS1 transgene rescues the mutant phenotype caused by dTgs1 loss. We demonstrate that both dTgs1 and Smn are required for viability of retinal progenitor cells and that downregulation of these genes leads to a reduced eye size. Importantly, overexpression of dTgs1 partially rescues the eye defects caused by Smn depletion, and vice versa. These results suggest that the Drosophila eye model can be exploited for screens aimed at the identification of genes and drugs that modify the phenotypes elicited by Tgs1 and Smn deficiency. These modifiers could help to understand the molecular mechanisms underlying SMA pathogenesis and devise new therapies for this genetic disease.