Pax‐6 emerges as a critical transcription factor that guides the fate of stem cells towards neural lineages. Its expression influences the differentiation of neural progenitors into diverse neuronal subtypes, glial cells, and other neural cell types. Pax‐6 operates with other regulatory factors to ensure the precise patterning and organization of the developing nervous system. The intricate interplay between Pax‐6 and other signaling pathways, transcription factors, and epigenetic modifiers underpins the complicated balance between stem cell maintenance, proliferation, and differentiation in neuroectodermal and ocular contexts. Dysfunction of Pax‐6 can lead to a spectrum of developmental anomalies, underscoring its importance in these processes. This review highlights the essential role of Pax‐6 expression in neuroectodermal and ocular stem cells, shedding light on its significance in orchestrating the intricate journey from stem cell fate determination to the emergence of diverse neural and ocular cell types. The comprehensive understanding of Pax‐6 function gained from a developmental biology perspective offers valuable insights into normal development and potential therapeutic avenues for neuroectodermal and ocular disorders.