Groucho restricts rhomboid expression and couples EGFR activation with R8 selection during Drosophila photoreceptor differentiation

Notch and EGFR signaling pathways play important roles in photoreceptor differentiation during Drosophila eye development. Notch signaling induces Enhancer of Split (E(spl)) proteins to repress atonal (ato) expression and restrict R8 photoreceptor cell fate. The R8 precursors express rhomboid (rho), which is required for the release of active EGFR ligand to activate EGFR signaling in surrounding cells for the subsequent stepwise recruitment. However, it is not clear about the mechanisms of transcriptional regulation of rho and how the lateral inhibition of Notch signaling and rho expression are coordinated. In this study, we show that inactivation of Groucho (Gro), an evolutionally conserved transcriptional corepressor, inhibits Ato upregulation, delays R8 determination, and promotes differentiation of R2-5 type of neurons. We demonstrate that these phenotypes are caused by a combination of the loss of Notch-mediated lateral inhibition and the precocious activation of EGFR signaling due to deregulated rho expression. Blocking EGFR signaling by Pnt-RNAi in conjunction with Gro-inactivation leads to lateral inhibition defects with deregulated Ato expression and R8 differentiation. We further show that inactivation of E(spl), which are the Gro binding transcription factors, causes deregulated rho expression and extra R8 cells within and posterior to the morphogenetic furrow (MF), and that E(spl) mediates the binding of Gro to the regulatory regions of both rho and ato genes in eye disc cells. Our results suggest that Gro inhibits rho expression in undifferentiated cells and represses the expression of both ato and rho in non-R8 precursors during initiation of photoreceptor differentiation in an E(spl)-dependent manner. The latter function of Gro provides novel insights into the mechanism that coordinates R8 specification with the restriction of initial rho expression to developing R8 cells.