The transcription factor Pax6 plays a pivotal role in eye development, as eye morphogenesis is arrested at a primitive optic vesicle stage in homozygous Pax6 mutant mouse embryos. The arrested optic vesicle development has led to the assumption that cellular differentiation programs are unable to initiate. Contrary to this, we found that neurogenesis in Pax6 mutant optic vesicles was not arrested, but instead accelerated as numerous neurons differentiated precociously, more than a day earlier than normal. To identify potential mechanisms for Pax6 repression of neuron differentiation, we examined retinal proliferation and differentiation. Mutant optic vesicles had reduced proliferation, coupled with precocious activation of the proneural gene, Mash1. Ectopic expression of Mash1 was sufficient to induce precocious neuron differentiation. Subsequently, precocious neurons adopted a generic rather than a specific retinal neuron fate. Thus, Pax6 regulates the timing of retinal neurogenesis and couples it with specific neuron differentiation programs.