Programmed cell death occurs naturally at different stages of neural development, including neurogenesis. The functional role of this early phase of neural cell death, which affects recently differentiated neurons among other cell types, remains undefined. Some mouse models defective in DNA double-strand break (DSB) repair present massive cell death during neural development, occasionally provoking embryonic lethality, while other organs and tissues remain unaffected. This suggests that DSBs occur frequently and selectively in the developing nervous system. We analyzed the embryonic retina of a mouse model deficient in the error-prone DNA polymerase μ (Polμ), a key component of the non-homologous end-joining (NHEJ) repair system. DNA DSBs were increased in the mutant mouse at embryonic day 13.5 (E13.5), as well as the incidence of cell death that affected young neurons, including retinal ganglion cells (RGCs). Polμ(-/-) mice also showed disturbed RGC axonal growth and navigation, and altered distribution of the axonal guidance molecules L1-CAM and Bravo (also known as Nr-CAM). These findings demonstrate that Polμ is necessary for proper retinal development, and support that the generation of DSBs and their repair via the NHEJ pathway are genuine processes involved in neural development.