The retinal pigment epithelium (RPE) shares its developmental origin with the neural retina (NR). When RPE development is disrupted, cells in the presumptive RPE region abnormally differentiate into NR-like cells. Therefore, the prevention of NR differentiation in the presumptive RPE area seems to be essential for regionalizing the RPE during eye development. However, its molecular mechanisms are not fully understood. In this study, we conducted a functional inhibition of a transcription factor Otx2, which is required for RPE development, using early chick embryos. The functional inhibition of Otx2 in chick eyes, using a recombinant gene encoding a dominant negative form of Otx2, caused the outer layer of the optic cup (the region forming the RPE, when embryos normally develop) to abnormally form an ectopic NR. In that ectopic NR, the characteristics of the RPE did not appear and NR markers were ectopically expressed. Intriguingly, the repression of Otx2 function also caused the ectopic expression of Fgf8 and Sox2 in the outer layer of the optic cup (the presumptive RPE region of normally developing eyes). These two factors are known to be capable of inducing NR cell differentiation in the presumptive RPE region, and are not expressed in the normally developing RPE region. Here, we suggest that Otx2 prevents the presumptive RPE region from forming the NR by repressing the expression of both Fgf8 and Sox2 which induce the NR cell fate.