Pax6 genes encode transcription factors with two DNA-binding domains that are highly conserved during evolution. In Drosophila, two Pax6 genes function in a pathway in which twin of eyeless (toy) directly regulates eyeless (ey), which is necessary for initiating the eye developmental pathway. To investigate the gene duplication of Pax6 that occurred in holometabolous insects like Drosophila and silkworm, we used different truncated forms of toy and small eyes (sey), and tested their capacity to induce ectopic eye development in an ey-independent manner. Even though the Paired domains of TOY and SEY have DNA-binding properties that differ from those of the Paired domain of EY, they all are capable of inducing ectopic eye development in an ey mutant background. We also show that one of the main functional differences between toy and ey lies in the C-terminal region of their protein products, implying differences in their transactivation potential. Furthermore, we show that only the homeodomain (HD) of EY is able to downregulate the expression of Distal-less (Dll), a feature that is required during endogenous eye development. These results suggest distinct functions of the two DNA-binding domains of TOY and EY, and significant evolutionary divergence between the two Drosophila Pax6 genes.