The paired type homeodomain gene, Rax, was previously identified as a key molecule in early eye formation in mice and humans. We report the expression patterns of two Rax family members from chicken, Rax and RaxL, and on the function of RaxL in photoreceptor development. Both Rax and RaxL are expressed in early retinal progenitor cells, with Rax being expressed at a significantly higher level than RaxL. At the time that photoreceptors begin to form, RaxL appears at a relatively high level in a subset of cells within the zone of proliferating progenitor cells. Subsequently, it is expressed in cells migrating to the photoreceptor layer, where it is highly expressed during the initial, but not late, stages of photoreceptor differentiation. To test the function of RaxL, a putative dominant-negative allele of RaxL comprising a fusion of the engrailed repressor domain and a region of RaxL (EnRaxL∆C) was introduced in vivo into the early chick eye using a retroviral vector. EnRaxL∆C, but not the dominant negative Rax (EnRax∆C), caused a significant reduction in expression of early markers of photoreceptor cells. Examination of the transactivation activity of RaxL on a reporter construct bearing a canonical photoreceptor-specific enhancer element showed that RaxL exhibited significant activation activity, and that this activity was severely diminished in the presence of EnRaxL∆C. The effect on photoreceptor gene expression in vivo was specific in that other cell types were unaffected, as was general proliferation in the retina. The reduction in numbers of cells expressing photoreceptor markers was probably due to decreased survival of developing photoreceptor cells, as there was increased apoptosis among cells of the retina expressing dominant-negative RaxL. We propose that RaxL plays a role in the initiation of differentiation, and also possibly commitment, of photoreceptor cells in the chicken retina.