Genes involved in eye development are highly conserved between vertebrates and Drosophila. Given the complex genetic network controlling early eye development, identification of regulatory sequences controlling gene expression will provide valuable insights toward understanding central events of early eye specification. We have focused on defining regulatory elements critical for Drosophila eyes absent (eya) expression. Although eya has a complex expression pattern during development, analysis of eye-specific mutations in the gene revealed a region selectively deleted in the eye-specific alleles. Here we have performed detailed analysis of the region deleted in the eye-specific eya(2) allele. This analysis shows that this region can direct early eya gene expression in a pattern consistent with that of normal eya in eye progenitor cells. Functional studies indicate that this element will restore appropriate eya transcript expression to rescue the eye-specific allele. We have examined regulation of this element during eye specification, both in normal eye development and in ectopic eye formation. These studies demonstrate that the element was activated upon ectopic expression of the eye specification genes eyeless and dachshund, but does not respond to ectopic expression of eya or sine oculis. The differential regulation of this element by genes involved during early retinal formation reveals new aspects of the genetic hierarchy of eye development.