DNA double-strand breaks (DSBs), selectively visualized as γ-H2AX+ foci, occur during the development of the central nervous system, including the retina, although their origin and biological significance are poorly understood. Mutant mice with DSB repair mechanism defects exhibit increased numbers of γ-H2AX+ foci, increased cell death during neural development, and alterations in axonogenesis in the embryonic retina. The aim of this study was to identify putative sources of DSBs. One of the identified DSBs sources is LINE-1 retrotransposition. While we did not detect changes in LINE-1 DNA content during the early period of cell death associated with retinal neurogenesis, retinal development was altered in mice lacking RAG-2, a component of the RAG-1,2-complex responsible for initiating somatic recombination in lymphocytes. Although γ-H2AX+ foci were less abundant in the rag2−/− mouse retina, retinal ganglion cell death was increased and axonal growth and navigation were impaired in the RAG-2 deficient mice, a phenotype shared with mutant mice with defective DNA repair mechanisms. These findings demonstrate that RAG-2 is necessary for proper retinal development, and suggest that both DSB generation and repair are genuine processes intrinsic to neural development.