Abstract The BTB/POZ (broad complex Tramtrack bric-a-brac/Pox virus and zinc finger) domain is an evolutionarily conserved protein-protein interaction motif. Many BTB-containing proteins are transcriptional regulators involved in a wide range of developmental processes. However, the significance of the BTB domain in development has not been evaluated. Here we present evidence that overexpression of the Tramtrack69 (Ttk69) protein not only blocks neuronal photoreceptor differentiation but also promotes nonneuronal cone cell specification in early Drosophila eye development. We show that the BTB domain is essential for Ttk69 function and single amino acid changes in highly conserved residues in this domain abolish Ttk69 activity. Interestingly, the Ttk69 BTB can be substituted by the BTB of the human Bcl-6 protein, suggesting that BTB function has been conserved between Drosophila and humans. We found that the Ttk69 BTB domain is critical for mediating interaction with the Drosophila homolog of C-terminal-binding protein (dCtBP) in vitro, and dCtBP− mutations genetically interact with ttk69. Furthermore, the C-terminal region downstream of the DNA-binding zinc fingers is shown to be essential for Ttk69 function. A dCtBP consensus binding motif in the C terminus appears to contribute to Ttk69 activity, but it cannot be fully responsible for the function of the C terminus.