Optic morphology (Om) mutations in Drosophila ananassae map to at least 22 loci scattered throughout the genome. They are semidominant, neomorphic, nonpleiotropic, and are associated with the insertion of a retrotransposon, tom. The Om(1A) gene, which is cytogenetically linked to the cut locus, was cloned using a DNA fragment of the cut locus of Drosophila melanogaster as a probe. Three of the eight alleles of Om(1A) examined have insertion of the tom element within a putative cut region. The gamma-ray-induced revertants of Om(1A) are accompanied with cut lethal mutations and rearrangements within the cut coding region. In the eye imaginal discs of the Om(1A) mutants, differentiation of photoreceptor clusters is suppressed, abnormal cell death occurs in the center and the cut protein is expressed ectopically. D. melanogaster flies transformed with a chimeric cut gene under the control of a heat-inducible promoter show excessive cell death in the region anterior to the morphogenetic furrow, suppressed differentiation to photoreceptor clusters and defect in the imaginal eye morphology when subjected to temperature elevation. These findings suggest that the tom element inserted within the Om(1A) region induces ectopic cut expression in the eye imaginal discs, thus resulting in the Om(1A) mutant phenotype.