During Drosophila oogenesis, asymmetrically localized Gurken activates the EGF receptor (Egfr) and determines dorsal follicle cell fates. Using a mosaic follicle cell system we have identified a mutation in the D-cbl gene which causes hyperactivation of the Egfr pathway. Cbl proteins are known to downregulate activated receptors. We find that the abnormal Egfr activation is ligand dependent. Our results show that the precise regulation of Egfr activity necessary to establish different follicle cell fates requires two levels of control. The localized ligand Gurken activates Egfr to different levels in different follicle cells. In addition, Egfr activity has to be repressed through the activity of D-cbl to ensure the absence of signaling in the ventral most follicle cells.