Entrainment of circadian clocks to environmental cues such as photoperiod ensures that daily biological rhythms stay in synchronization with the Earth's rotation. The vertebrate pineal organ has a conserved role in circadian regulation as the primary source of the nocturnal hormone melatonin. In lower vertebrates, the pineal has an endogenous circadian clock as well as photoreceptive cells that regulate this clock. The zebrafish opsin protein Exo-rhodopsin (Exorh) is expressed in pineal photoreceptors and is a candidate to mediate the effects of environmental light on pineal rhythms and melatonin synthesis. We demonstrate that Exorh has an important role in regulating gene transcription within the pineal. In developing embryos that lack Exorh, expression of the exorh gene itself and of the melatonin synthesis gene serotonin N-acetyl transferase 2 (aanat2) are significantly reduced. This suggests that Exorh protein at the cell membrane is part of a signaling pathway that positively regulates transcription of these genes, and ultimately melatonin production, in the pineal. Like many other opsin genes, exorh is expressed with a daily rhythm: mRNA levels are higher at night than during the day. We find that the transcription factor Orthodenticle homeobox 5 (Otx5) activates exorh transcription, while the putative circadian clock component Period 3 (Per3) represses expression during the day, thereby contributing to the rhythm of transcription. This work identifies novel roles for Exorh and Per3, and gives insight into potential interactions between the sensory and circadian systems within the pineal.