BACKGROUND: Most differentiating cells are arrested in G1-phase of the cell cycle and this proliferative quiescence appears important to allow differentiation programmes to be executed. An example occurs in the Drosophila eye imaginal disc, where all cells are synchronized and arrested in G1 phase prior to making a fate choice either to initiate the first round of photoreceptor differentiation or to re-enter one terminal mitosis. RESULTS: We have analysed the mechanism of this temporally regulated G1-phase in order to develop an integrated model of this proliferative regulation. We find that an overlapping set of cell cycle inhibitors combine to form an efficient barrier to cell cycle progression. This barrier depends on both the primary secreted signals that drive retinal development, Dpp and Hh. Each of these has distinct, as well as partially overlapping functions, in ensuring that Cyclin E and dE2F1 are kept in check. Additionally, inhibition of Cyclin A by Roughex is essential, and this regulation is independent of Dpp and Hh. CONCLUSION: One implication of these results is to further support the idea that Cyclin A has important functions in S-phase entry as well as in mitosis. The unexpectedly complex network of regulation may reflect the importance of cells being uniformly ready to respond to the inductive signals that coordinate retinal differentiation.