The transcription factors Pax2 and Pax6 are co-expressed in the entire optic vesicle (OV) prior and concomitant with the establishment of distinct neuroretinal, retinal, pigmented-epithelial and optic-stalk progenitor domains, suggesting redundant functions during retinal determination. Pax2; Pax6 compound mutants display a dose-dependent reduction in the expression of the melanocyte determinant Mitf, accompanied by transdifferentiation of retinal pigmented epithelium (RPE) into neuroretina(NR) in Pax2^-/-; Pax6^+/- embryos,which strongly resembles the phenotype of Mitf-null mutants. In Pax2^-/-; Pax6^-/- OVs Mitffails to be expressed and NR markers occupy the area that usually represents the Mitf⁺ RPE domain. Furthermore, both, Pax2 and Pax6 bind to and activate a MITF RPE-promoter element in vitro,whereas prolonged expression of Pax6 in the Pax2-positive optic stalk leads to ectopic Mitf expression and RPE differentiation in vivo. Together,these results demonstrate that the redundant activities of Pax2 and Pax6 direct the determination of RPE, potentially by directly controlling the expression of RPE determinants.