Mammalian hairy and Enhancer of split homolog 1 (HES1), a basic helix-loop-helix factor gene, is expressed in retinal progenitor cells, and its expression decreases as differentiation proceeds. Retinal progenitor cells infected with HES1-transducing retrovirus did not differentiate into mature retinal cells, suggesting that persistent expression of HES1 blocks retinal development. In contrast, in the retina of HES1-null mutant mice, differentiation was accelerated, and rod and horizontal cells appeared prematurely and formed abnormal rosette-like structures. Lens and cornea development was also severely disturbed. Furthermore, in the mutant retina, bipolar cells extensively died, and finally disappeared. These studies provide evidence that HES1 regulates differentiation of retinal neurons and is essential for eye morphogenesis.