Genetic circuits responsible for the development of photoreceptive organs appear to be evolutionarily conserved. Here, the Xenopus homologue Xtll of the Drosophila gene tailless (tll), which we find to be expressed during early eye development, is characterized with respect to its relationship to vertebrate regulators of eye morphogenesis, such as Pax6 and Rx. Expression of all three genes is first detected in the area corresponding to the eye anlagen within the open neural plate in partially overlapping, but not identical, patterns. During the evagination of the optic vesicle, Xtll expression is most prominent in the optic stalk, as well as in the distal tip of the forming vesicle. In tadpole-stage embryos, Xtll gene transcription is most prominent in the ciliary margin of the optic cup. Inhibition of Xtll function in Xenopus embryos interferes specifically with the evagination of the eye vesicle and, in consequence, Xpax6 gene expression is severely reduced in such manipulated embryos. These findings suggest that Xtll serves an important regulatory function in the earliest phases of vertebrate eye development.