There is no established explanation for the evolution of the inverted retina in the vertebrate camera-type eye. This report shows that the inverted retina may have evolved in the light-sensitive organ of the predecessor of the vertebrates. A patch of light-sensitive epithelium with light-facing photoreceptors developed through evagination into a transparent spherical organ covered in photoreceptors. Photons can activate a photoreceptor either directly or indirectly through the transparent interior of the organ. Models for photoreceptor distribution and spatial resolution show how the inverted retina may have evolved with minimal morphological changes, assuming that natural selection driven optimization of the maximum detectable spatial resolution played a major role.