The vertebrate retina develops from a sheet of neuroepithelial cells. Because adherens and tight junctions are critical for epithelial and neuronal differentiation in a variety of eukaryotic systems, we examined the role of Par-3, a PDZ scaffold protein that is critical in cellular membrane junction formation. We cloned the zebrafish Par-3 ortholog (pard3), which encodes two Pard3 proteins (150 and 180 kDa) that differ in their carboxyl-terminus. Immunohistochemistry revealed that Pard3 localized to the apical region of the retinal and brain neuroepithelium, partially overlapping the adherens junction-associated actin bundles. After retinal lamination, the Pard3 protein was restricted to the outer limiting membrane and the outer and inner plexiform layers in the retina. Reducing Pard3 expression with antisense morpholinos caused loss of the retinal pigmented epithelia, disruption of retinal lamination, and cell death in the ventral diencephalon, which resulted in cyclopia. Overexpressing Pard3 by injection of wild-type pard3 mRNA resulted in cyclopia and eyeless embryos. Thus, Pard3 plays a critical role in the origination and separation of zebrafish eye fields and retinal lamination.