The tissue polarity pathway is required for the establishment of epithelial polarity in a variety of vertebrate and invertebrate organs. Core tissue polarity proteins act in a dynamically regulated complex to direct the polarization of the Drosophila eye. We report the identification and characterization of bedraggled (bdg), a novel gene that regulates one output of the tissue polarity pathway - the establishment of the R3/R4 photoreceptor fates. bdg encodes a novel, putative transporter protein and interacts genetically with all of the core polarity genes to influence the specification of the R3 and R4 cell fates. Finally, bdg is required for both viability and the initial stages of imaginal disc development.