Endocytosis is a multi-step process involving a large number of proteins, both general factors, such as clathrin and adaptor protein complexes, and unique proteins, which modulate specialized endocytic processes, like the EHD proteins. EHDs are a family of Eps15 Homology Domain containing proteins that consists of four mammalian homologs, one C. elegans, one Drosophila melanogaster and two plants orthologs. These membrane-associated proteins are involved in different steps of endocytic trafficking pathways. We have previously shown that the Drosophila EHD ortholog, PAST1, associates predominantly with the plasma membrane. Mutations in Past1 result in defects in endocytosis, male sterility, temperature sensitivity and premature death of the flies. Also, Past1 genetically interacts with Notch. In the present study, we investigated the role of PAST1 in the developing fly eye. In mutant flies lacking PAST1, abnormal differentiation of photoreceptors R1, R6 and R7 was evident, with partial penetrance. Likewise, five cone cells were present instead of four. Expression of transgenic PAST1 resulted in a dominant negative effect, with a phenotype similar to that of the deletion mutant, and appearance of additional inter-ommatidial pigment cells. Our results strongly suggest a role for PAST1 in differentiation of photoreceptors R1/R6/R7 and cone cells of the fly ommatidia.