The optic vesicle is a multipotential primordium of the retina, which becomes subdivided into the neural retina and retinal pigmented epithelium domains. Although the roles of several paracrine factors in patterning the optic vesicle have been studied extensively, little is known about cell-autonomous mechanisms that regulate coordinated cell morphogenesis and cytodifferentiation of the retinal pigmented epithelium. Here we demonstrate that members of the SoxB1 gene family, Sox1, Sox2 and Sox3, are all downregulated in the presumptive retinal pigmented epithelium. Constitutive maintenance of SoxB1 expression in the presumptive retinal pigmented epithelium both in vivo and in vitro resulted in the absence of cuboidal morphology and pigmentation, and in concomitant induction of neural differentiation markers. We also demonstrate that exogenous Fgf4 inhibits downregulation all SoxB1 family members in the presumptive retinal pigment epithelium. These results suggest that retinal pigment epithelium morphogenesis and cytodifferentiation requires SoxB1 downregulation, which depends on the absence of exposure to an FGF-like signal.