The Drosophila compound eye is made from hundreds of ommatidia, each of which is a precise assemblage of photoreceptors and support cells. Each cell occupies a unique position in the structure, and developmental errors that incorrectly specify cells can be readily detected. This, and other features have led to the fly ommatidium becoming one of the premier models for understanding how cell fate specification occurs during development. Studies have examined how differentiating cells express selective signals, and how undetermined cells receive and interpret those signals. Many investigations have examined the specification of the R7 photoreceptor, and a key role for the receptor tyrosine kinase (RTK) signaling pathway was identified some time ago. More recently, a role for the Notch (N) signaling pathway was also found, and a remarkable and interwoven series of interactions between the two pathways has been uncovered. This review examines the cellular contexts in which R7 specification occurs, and compares and contrasts how cell fate is apportioned in closely allied cells. It examines the nature of the ligands and receptors involved, and it details the ramifying interactions between the two signaling pathways.