During organogenesis, cell proliferation is followed by the differentiation of specific cell types to form an organ. Any aberration in differentiation can result in developmental defects, which can result in a partial to a near‐complete loss of an organ. We employ the Drosophila eye model to understand the genetic and molecular mechanisms involved in the process of differentiation. In a forward genetic screen, we identified, cullin‐4 (cul‐4), which encodes an E3 ubiquitin ligase, to play an important role in retinal differentiation. During development, cul‐4 is known to be involved in protein degradation, regulation of genomic stability, and regulation of cell cycle. Previously, we have reported that cul‐4 regulates cell death during eye development by downregulating Wingless (Wg)/Wnt signaling pathway. We found that loss‐of‐function of cul‐4 results in a reduced eye phenotype, which can be due to onset of cell death. However, we found that loss‐of‐function of cul‐4 also affects retinal development by downregulating retinal determination (RD) gene expression. Early markers of retinal differentiation are dysregulated in cul‐4 loss of function conditions, indicating that cul‐4 is necessary for differentiation. Furthermore, loss‐of‐function of cul‐4 ectopically induces expression of negative regulators of eye development like Wg and Homothorax (Hth). During eye development, Wg is known to block the progression of a synchronous wave of differentiation referred to as Morphogenetic furrow (MF). In cul‐4 loss‐of‐function background, expression of dpp‐lacZ, a MF marker, is significantly downregulated. Our data suggest a new role of cul‐4 in retinal differentiation. These studies may have significant bearings on our understanding of early eye development.