The devastating effects and incurable nature of hereditary and sporadic retinal diseases such as Stargardt disease, age-related macular degeneration or retinitis pigmentosa urgently require the development of new therapeutic strategies. Additionally, a high prevalence of retinal toxicities is becoming more and more an issue of novel targeted therapeutic agents. Ophthalmologic drug development, to date, largely relies on animal models, which often do not provide results that are translatable to human patients. Hence, the establishment of sophisticated human tissue-based in vitro models is of upmost importance. The discovery of self-forming retinal organoids (ROs) derived from human embryonic stem cells (hESCs) or human induced pluripotent stem cells (hiPSCs) is a promising approach to model the complex stratified retinal tissue. Yet, ROs lack vascularization and cannot recapitulate the important physiological interactions of matured photoreceptors and the retinal pigment epithelium (RPE). In this study, we present the retina-on-a-chip (RoC), a novel microphysiological model of the human retina integrating more than seven different essential retinal cell types derived from hiPSCs. It provides vasculature-like perfusion and enables, for the first time, the recapitulation of the interaction of mature photoreceptor segments with RPE in vitro. We show that this interaction enhances the formation of outer segment-like structures and the establishment of in vivo-like physiological processes such as outer segment phagocytosis and calcium dynamics. In addition, we demonstrate the applicability of the RoC for drug testing, by reproducing the retinopathic side-effects of the anti-malaria drug chloroquine and the antibiotic gentamicin. The developed hiPSC-based RoC has the potential to promote drug development and provide new insights into the underlying pathology of retinal diseases.