The timing of cell cycle exit is tightly linked to cell fate specification in the developing retina. Accordingly, several tumor suppressor genes, which are key regulators of cell cycle exit in cancer cells, play critical roles in retinogenesis. Here we investigated the role of Zac1, a tumor suppressor gene encoding a zinc finger transcription factor, in retinal development. Strikingly, in gain-of-function assays in Xenopus, mouse Zac1 promotes proliferation and apoptosis at an intermediate stage of retinogenesis. Zac1 also influences cell fate decisions, preferentially promoting the differentiation of tumor-like clusters of abnormal neuronal cells in the ganglion cell layer, as well as inducing the formation of supernumerary Müller glial cells at the expense of other cell types. Thus Zac1 has the capacity to influence cell cycle exit, and cell fate specification and differentiation decisions by retinal progenitors, suggesting that further functional studies will uncover new insights into how retinogenesis is regulated.