The phenomenon of RNA polymerase II (Pol II) pausing at transcription start site (TSS) is one of the key rate-limiting steps in regulating genome-wide gene expression. In Drosophila embryo, Pol II pausing is known to regulate the developmental control genes expression, however, the functional implication of Pol II pausing during later developmental time windows remains largely unknown. A highly conserved zinc finger transcription factor, Motif 1 Binding Protein (M1BP), is known to orchestrate promoter-proximal pausing. We found a new role of M1BP in regulating Drosophila eye development. Downregulation of M1BP function suppresses eye fate resulting in a reduced eye or a “no-eye” phenotype. The eye suppression function of M1BP has no domain constraint in the developing eye. Downregulation of M1BP results in more than two-fold induction of wingless (wg) gene expression along with robust induction of Homothorax (Hth), a negative regulator of eye fate. The loss-of-eye phenotype of M1BP downregulation is dependent on Wg upregulation as downregulation of both M1BP and wg, by using wgRNAi, shows a significant rescue of a reduced eye or a “no-eye” phenotype, which is accompanied by normalizing of wg and hth expression levels in the eye imaginal disc. Ectopic induction of Wg is known to trigger developmental cell death. We found that upregulation of wg as a result of downregulation of M1BP also induces apoptotic cell death, which can be significantly restored by blocking caspase-mediated cell death. Our data strongly imply that transcriptional regulation of wg by Pol II pausing factor M1BP may be one of the important regulatory mechanism(s) during Drosophila eye development.