Epithelial-to-mesenchymal transition (EMT) of the retinal pigment epithelium (RPE) is commonly observed at sites of choroidal neovascularization in patients suffering from age-related macular degeneration. To learn in an experimental model how RPE EMT affects the biology of the choroidal vasculature, we studied transgenic mice (βB1-TGF-β1) with ocular overexpression of transforming growth factor-β1 (TGF-β1). RPE EMT was detectable at postnatal day (P)1 and included marked structural and functional alterations such as loss of the outer blood-retina barrier and reduced mRNA expression of the RPE-characteristic molecules Rlbp1, Rpe65, Rbp1 and Vegfa. Moreover, vascular endothelial growth factor (VEGF) was not detectable by immunohistochemistry at the RPE/choroid interface, while RPE cells stained intensely for α-smooth muscle actin. The choriocapillaris, the characteristic choroidal capillary network adjacent to the RPE, developed normally and was not obviously changed in embryonic transgenic eyes but was absent at P1 indicating its atrophy. At around the same time, photoreceptors stopped to differentiate and photoreceptor apoptosis was abundant in the second week of life. Structural changes were also seen in the retinal vasculature of transgenic animals, which did not form intraretinal vessels, and the hyaloid vasculature, which did not regress. In addition, the amounts of retinal HIF-1α and its mRNA were markedly reduced. We conclude that high amounts of active TGF-β1 in the mouse eye cause transdifferentiation of the RPE to a mesenchymal phenotype. The loss of epithelial differentiation leads to the diminished synthesis of RPE-characteristic molecules including that of VEGF. Lack of RPE-derived VEGF causes atrophy of the choriocapillaris, a scenario that disrupts photoreceptor differentiation and finally results in photoreceptor apoptosis. Lack of retinal vessel formation and of hyaloid vessel regression might be caused by the decrease in the metabolic requirements of the neuroretina leading to low amounts of retinal HIF-1α. In summary, our data indicate that failure of RPE differentiation may well precede and cause atrophy of the choriocapillaris. In contrast, RPE EMT is not sufficient to cause choroidal neovascularization.