Photoreceptor induction in the developing Drosophila eye is triggered by the activation of the Ras pathway. Subsequently, the Ras-mediated activation of site-specific transcription factors leads to the expression of putative "effector" genes. The coactivator function of the basal transcription factor TFIIA has been shown previously to enhance the trans-activation potential of site-specific transcription factors in vitro. Here, we show that the expression of the small subunit of TFIIA (dTFIIA-S) is specifically up-regulated in a transient manner during Ras-mediated photoreceptor induction. Furthermore, although null mutations in dTFIIA-S are cell lethal, a hypomorphic dTFIIA-S allele demonstrates an increased requirement for this factor during photoreceptor development. In addition, the cone cell to R7 photoreceptor transformation caused by ectopic activation of the Ras pathway during eye development is suppressed by the removal of one functional copy of the dTFIIA-S locus revealing the sensitivity of this process to reductions in dTFIIA-S activity. These results are the first in vivo evidence for the coactivator function in transcriptional enhancement proposed for TFIIA.