Following tissue damage, stem or precursor cells often undergo proliferation to replace lost cells. This proliferation is tightly regulated as inappropriate cell cycle re-entry can lead to tumor growth and cancer. It is unclear how proliferation, often of cells that are normally quiescent, is controlled following tissue damage. I have investigated the mechanism driving regeneration in a quiescent tissue using the Drosophila melanogaster eye imaginal disc as a model. The eye disc contains a population of quiescent, undifferentiated cells that re-enter the cell cycle and undergo compensatory proliferation following damage driven by GMR-hid. To identify genes involved in this process, I performed an RNAi screen of ~400 transcription factors. Knockdown of the transcription factor scalloped completely blocked compensatory proliferation. Knockdown of Scalloped’s transcriptional co-activator Yorkie also disrupts compensatory proliferation. Furthermore, in GMR-hid discs, both Scalloped and Yorkie are required to drive accumulation of Cyclin E, a previously characterized transcriptional target that is essential for entry into S-phase. Yorkie is a transcriptional effector of the Hippo pathway, which has been implicated in regeneration in Drosophila and vertebrates. Our genetic data suggests that activation of Yorkie is likely driven by inhibition of Hippo pathway components by the LIM domain containing-protein Ajuba. Based on previous work in other labs and our own data manipulating cytoskeletal activity, we propose a model where changes in cellular tension induced by massive tissue extrusion drives activation of Ajuba and, ultimately, compensatory proliferation. In addition to the mechanism driving compensatory proliferation in the developing eye, we are also interested in the eventual fate of these compensatory proliferating cells, as it is currently unclear whether these cells can faithfully replace all cells lost following tissue damage. One possibility is cells that re-enter the cell cycle and proliferate are able to adopt all retinal cell type fates, including neuronal photoreceptors which differentiate before compensatory proliferation occurs; alternatively, the fate of these cells may be limited to lineages that have not yet differentiated at the time compensatory proliferation occurs. To investigate this question, I am performing lineage tracing experiments to determine the fate of these compensatory proliferating cells. These results will be important for understanding how cell fate might be affected following tissue damage and whether the mechanisms driving cell cycle changes, from quiescent to proliferating, also drive changes in cell fate that contribute to productive regeneration.