In the developing Drosophila eye, differentiation is coordinated with synchronized progression through the cell cycle. Signaling mediated by the transforming growth factor-beta-related gene decapentaplegic (dpp) was required for the synchronization of the cell cycle but not for cell fate specification. DPP may affect cell cycle synchronization by promoting cell cycle progression through the G(2)-M phases. This synchronization is critical for the precise assembly of the eye.