RPE65 is an abundant protein in the retinal pigment epithelium. Mutations in RPE65 are associated with inherited retinal dystrophies. Although it is known that RPE65 is critical for regeneration of 11-cis retinol in the visual cycle, the function of RPE65 is elusive. Here we show that recombinant RPE65, when expressed in QBI-293A and COS-1 cells, has robust enzymatic activity of the previous unidentified isomerohydrolase, an enzyme converting all-trans retinyl ester to 11-cis retinol in the visual cycle. The initial rate for the reaction is 2.9 pmol/min per mg of RPE65 expressed in 293A cells. The isomerohydrolase activity of RPE65 requires coexpression of lecithin retinol acyltransferase in the same cell to provide its substrate. This enzymatic activity is linearly dependent on the expression levels of RPE65. This study demonstrates that RPE65 is the long-sought isomerohydrolase and fills a major gap in our understanding of the visual cycle. Identification of the function of RPE65 will contribute to the understanding of the pathogenesis for retinal dystrophies associated with RPE65 mutations.