SYNOPSIS. The region of the prospective eye vesicle of the Fl generation from parents known to be heterozygous for the gene e, which produces eyeless embryos in the homozygous condition was grafted under the epidermis of host embryos. Donor and host embryos were randomly selected at the stage of fusion of the neural folds to form pairs. Donor and receptor embryos were operated at their right side only so that the left side could serve to identify the phenotype of each operated embryo. The experimental results obtained in the four classes of donor-receptor combinations, can be described as follows: 1) The prospective eye vesicle of phenotypically wild type donors, grafted under the flank epidermis of receptor embryos of the same type, developed pigmented retina at a rate of over 90%, and a lens was found in this combination in about one third of the cases. 2) Surprisingly, the prospective optic vesicle from eyeless embryos, grafted to normal hosts, also developed pigmented retina at a frequency which was not statistically different from that obtained with prospective optic vesicles from wild type embryos. The developing optic cups from eyeless embryos also induced a lens in some cases. In the class of experiments in which optic vesicles from wild type embryos were grafted under flank epidermis of eyeless hosts, significantly fewer grafts developed pigmented retina as compared to wild type controls. Prospective optic vesicles grafted from eyeless embryos under epidermis of eyeless hosts, in one case, produced pigmented retina. In a complementary set of experiments, epidermis from the flank was grafted upon the prospective eye region of host embryos. The result of the four classes of experiments corroborated the previous results: Wild type epidermis may cure the eyeless situation, whereas epidermis from eyeless embryos suppresses eye formation in the wild type host.