Mouse embryos, homozygous for the small eye (Sey) mutation die soon after birth with severe facial abnormalities that result from the failure of the eyes and nasal cavities to develop. Mutations in the Pax6 gene are responsible for the Sey phenotype. As a general disruption of eye and nasal development occurs in the homozygous Sey embryos, it is unclear, from the mutant phenotype alone, which tissues require functional Psx6. To examine the roles for Pax6 in eye and nasal development we produced chimeric mouse embryos composed of wild-type and Sey mutant cells. In these embryos we found that mutant cells were excluded from both the lens and nasal epithelium. Both of these tissues were smaller, and in some cases absent, in chimeras with high proportions of mutant cells. The morphology of the optic cup was also severely affected in these chimeras; mutant cells were excluded from the retinal pigmented epithelium and did not intermix with wild-type cells in other regions. The evidence shows that Pax6 has distinct roles in the nasal epithelium and the principal tissue components of the embryonic eye, acting directly and cell autonomously in the optic cup and lens. We suggest that Pax6 may promote cell surface changes in the optic cup and control the fate of the ectoderm from which the lens and nasal epithelia are derived.