The vertebrate retina has an area where visual cells are closely packed for proper vision that is known as a fovea, an area centralis or a visual streak. The molecular mechanism that regulates the formation of these structures and visual cell gradients is unknown. The transcription factor Pax6 is a master regulator of eye development. A Pax6 isoform that contains an exon 5a-encoded 14 amino acid insertion in its paired domain, Pax6(+5a), has different DNA-binding properties compared with the Pax6(-5a) isoform. Little is known about the functional significance of Pax6(+5a). Here, we show that Pax6(+5a) is expressed especially in the retinal portion where visual cells accumulate during eye development and, when overexpressed, induces a remarkable well-differentiated retina-like structure. Pax6(+5a) proteins that bear point mutations that are found in patients with foveal hypoplasia are unable to induce these ectopic retina-like structures. We propose that Pax6(+5a) induces a developmental cascade in the prospective fovea, area centralis or visual streak region that leads to the formation of a retinal architecture bearing densely packed visual cells.