The Drosophila phototransduction cascade serves as a paradigm for characterizing the regulation of sensory signaling and TRP channels in vivo . Activation of these channels requires phospholipase C (PLC) and may depend on subsequent production of diacylglycerol (DAG) and downstream metabolites . DAG could potentially be produced through a second pathway involving the combined activities of a phospholipase D (PLD) and a phosphatidic acid (PA) phosphatase (PAP). However, a role for a PAP in the regulation of TRP channels has not been described. Here, we report the identification of a PAP, referred to as Lazaro (Laza). Mutations in laza caused a reduction in the light response and faster termination kinetics. Loss of laza suppressed the severity of the phenotype caused by mutation of the DAG kinase, RDGA , indicating that Laza functions in opposition to RDGA. We also showed that the retinal degeneration resulting from overexpression of the PLD was suppressed by elimination of Laza. These data demonstrate a requirement for a PLD/PAP-dependent pathway for achieving the maximal light response. The genetic interactions with both rdgA and Pld indicate that Laza functions in the convergence of both PLC- and PLD-coupled signaling in vivo.