Formation of retinal ganglion cells (RGCs) is governed by a hierarchical gene regulatory network with key transcription factors such as Atoh7, Pou4f2 and Isl1 functioning at different levels. Past studies concluded that Atoh7 is critical for the emergence of the RGC lineage in the developing retina, whereas Pou4f2 and Isl1 function further downstream. Atoh7 is expressed in a subset of retinal progenitor cells (RPCs) and is considered a competence factor for the RGC fate, but the molecular properties of these RPCs have not been well characterized. In this study, we first used conventional RNAseq to investigate transcriptomic changes in Atoh7-, Pou4f2-, and Isl1-null retinas at embryonic (E) day 14.5 and identified the differentially expressed genes (DEGs), which expanded our understanding of the scope of downstream events regulated by these factors. We then performed single cell RNA-seq (scRNA-seq) on E13.5 wild-type and Atoh7-null retinal cells using the 10X Chromium platform. Clustering analysis not only correctly identified known cell types at this developmental stage, including RPCs, RGCs, cones, and amacrine/horizontal cells, but also revealed a transitional cell state which was marked by Atoh7 and genes for other lineages in a highly overlapping fashion and shared by all early developmental trajectories. These results provide significant insights into the nature of RPC competence for different retinal cell fates and the likely mechanism by which these fates are committed. Further, analysis of the Atoh7-null retina not only identified the affected genes/pathways involved in the different cell states but also revealed that in the absence of Atoh7, the RGC lineage still progressed considerably and a substantial amount of RGC-specific gene expression still occurred. Thus, Atoh7 likely collaborates with other factors to shepherd the transitional RPCs to the RGC lineage by competing with other lineage factors and activating RGC-specific genes. This study thus revises our current view on the emergence of the RGC lineage and shed new light on the general mechanisms governing retinal cell differentiation.