Stochastic mechanisms are critical to diversify cell fates during development. How the proportions of randomly determined cell fates is controlled is poorly understood. The stochastic on/off expression of the transcription factor Spineless (Ss) in R7 photoreceptors determines the patterning of two subtypes in the fly eye. Our studies of natural variation revealed a single nucleotide polymorphism (SNP) in a non-coding DNA element in the ss gene locus that lowers the percentage of Ss on cells (“low ss SNP”). This SNP lies within a binding site for the zinc finger transcriptional repressor Klumpfuss (Klu) and increases Klu binding affinity. Klu acts in R7s to lower the ratio of Ss on to off cells: loss of klu function causes more R7s to express Ss whereas increasing Klu levels causes a decrease in the number of Ss-expressing R7s. Thus, the levels of Klu protein are converted into a ratio of Ss on/off cells. Our data suggest that stochastic on/off gene expression is controlled by threshold levels of trans factors bound to low affinity sites.