During development, differentiation is often initiated by the activation of different receptor tyrosine kinases (RTKs), which results in the tightly regulated activation of cytoplasmic signaling cascades. In the differentiation of neurons and glia in the developing Drosophila eye, we found that the proper intensity of RTK signaling downstream of fibroblast growth factor receptor (FGFR) or epidermal growth factor receptor required two mutually antagonistic feedback loops. We identified a positive feedback loop mediated by the Ras association (RA) domain-containing protein Rau that sustained Ras activity and counteracted the negative feedback loop mediated by Sprouty. Rau has two RA domains that together showed a binding preference for GTP (guanosine 5'-triphosphate)-loaded (active) Ras. Rau homodimerized and was found in large-molecular weight complexes. Deletion of rau in flies decreased the differentiation of retinal wrapping glia and induced a rough eye phenotype, similar to that seen in alterations of Ras signaling. Further, the expression of sprouty was repressed and that of rau was increased by the COUP transcription factor Seven-up in the presence of weak, but not constitutive, activation of FGFR. Together, our findings reveal another regulatory mechanism that controls the intensity of RTK signaling in the developing neural network in the Drosophila eye.