Control of Ras activity is crucial for normal cellular behavior such as fate determination during development. Although several GTPase activating proteins (GAPs) have been shown to act as negative regulators of Ras, the mechanisms involved in regulating their activity in vivo are poorly understood. Here we report the structural requirements for Gap1 activity in cone cell fate decisions during Drosophila eye development. The Gap1 catalytic domain alone is not sufficient for in vivo activity, indicating a requirement for the additional domains. An inositol-1,3,4, 5-tetrakisphosphate (IP4)-sensitive extended PH domain is essential for Gap1 activity, while Ca2+-sensitive C2 domains and a glutamine-rich region contribute equally to full activity in vivo. Furthermore, we find a strong positive genetic interaction between Gap1 and phospholipase Cgamma (PLCgamma), an enzyme which generates inositol-1,4,5-trisphosphate, a precursor for IP4 and a second messenger for intracellular Ca2+ release. These results suggest that Gap1 activity in vivo is stimulated under conditions of elevated intracellular Ca2+ and IP4. Since receptor tyrosine kinases (RTKs) trigger an increase in intracellular Ca2+ and IP4 concentration through stimulation of PLCgamma, RTKs may stimulate not only activation of Ras but also its deactivation by Gap1, thereby moderating the strength and duration of the Ras signal.