Cellular determination in the Xenopus retina is not a strict consequence of cell lineage or cell birthdate. This suggests that a retinal cell gets its fate by either local cellular interactions, diffusible factors, or an indeterminate stochastic mechanism. We have performed an in vitro experiment in which cellular contact is controlled to test the first possibility directly. We use these experiments to demonstrate that two cellular inductions are involved in photoreceptor determination in vitro and that these inductions also occur during development in the retina in vivo. The first interaction is responsible for biasing cells toward either a generic photoreceptor or a cone fate, while the second directs cells toward a rod cell fate.