The shattered1 (shtd1) mutation disrupts Drosophila compound eye structure. In this report, we show that the shtd1 eye defects are due to a failure to establish and maintain G1 arrest in the morphogenetic furrow (MF) and a defect in progression through mitosis. The observed cell cycle defects were correlated with an accumulation of cyclin A (CycA) and String (Stg) proteins near the MF. Interestingly, the failure to maintain G1 arrest in the MF led to the specification of R8 photoreceptor cells that undergo mitosis, generating R8 doublets in shtd1 mutant eye discs. We demonstrate that shtd encodes Apc1, the largest subunit of the anaphase-promoting complex/cyclosome (APC/C). Furthermore, we show that reducing the dosage of either CycA or stg suppressed the shtd1 phenotype. While reducing the dosage of CycA is more effective in suppressing the premature S phase entry in the MF, reducing the dosage of stg is more effective in suppressing the progression through mitosis defect. These results indicate the importance of not only G1 arrest in the MF but also appropriate progression through mitosis for normal eye development during photoreceptor differentiation.