Development of the vertebrate eye requires a series of steps including specification of the anterior neural plate, evagination of the optic vesicles from the ventral forebrain, and the cellular differentiation of the lens and retina. Homeobox-containing genes, especially the transcription regulator Pax6, play a critical role in vertebrate and invertebrate eye formation. Mutations in Pax6 function result in eye malformations known as Aniridia in humans and Small eye syndrome in mice(1-3). The Drosophila homologue of Pax6, eyeless, is also necessary for correct invertebrate eye development, and its misexpression leads to formation of ectopic eyes in Drosophila(4,5). Here we show that a conserved vertebrate homeobox gene, Rx, is essential for normal eye development, and that its misexpression has profound effects on eye morphology. Xenopus embryos injected with synthetic Rx RNA develop ectopic retinal tissue and display hyperproliferation in the neuroretina. Mouse embryos carrying a null allele of this gene do not form optic cups and so do not develop eyes. The Rx gene family plays an important role in the establishment and/or proliferation of retinal progenitor cells.