Dorsoventral (DV) patterning is crucial for eye development in invertebrates and higher animals. DV lineage restriction is the primary event in undifferentiated early eye primordia of Drosophila. InDrosophila eye disc, a dorsal-specific GATA family transcription factor pannier (pnr) controls Iroquois-Complex (Iro-C) genes to establish the dorsal eye fate whereas Lobe (L), which is involved in controlling a Notch ligand Serrate (Ser), is specifically required for ventral growth. However, fate of eye disc cells before the onset of dorsal expression of pnr and Iro-C is not known. We show that L/Ser are expressed in entire early eye disc before the expression of pnr and Iro-C is initiated in late first instar dorsal eye margin cells. Our evidence suggests that during embryogenesis pnr activity is not essential for eye development. We present evidence that loss of L or Ser function prior to initiation of pnr expression results in elimination of the entire eye, whereas after the onset of pnr expression it results only in preferential loss of ventral half of eye. We demonstrate that dorsal eye disc cells also become L or Serdependent when they are ventralized by removal of pnr or Iro-C gene function. Therefore, we propose that early state of the eye prior to DV lineage restriction is equivalent to ventral and requires L and Sergene function.