Wnt signaling orchestrates multiple aspects of central nervous system development, including cell proliferation and cell fate choices. In this study, we used gene transfer to activate or inhibit canonical Wnt signaling in vivo in the developing eye. We found that the expression of Wnt2b or constitutively active (CA) beta-catenin inhibited retinal progenitor gene (RPG) expression and the differentiation of retinal neurons. In addition, Wnt signal activation in the central retina was sufficient to induce the expression of markers of the ciliary body and iris, two tissues derived from the peripheral optic cup (OC). The expression of a dominant-negative (DN) allele of Lef1, or of a Lef1-engrailed fusion protein, led to the inhibition of expression of peripheral genes and iris hypoplasia, suggesting that canonical Wnt signaling is required for peripheral eye development. We propose that canonical Wnt signaling in the developing optic vesicle (OV) and OC plays a crucial role in determining the identity of the ciliary body and iris. Because wingless (wg) plays a similar role in the induction of peripheral eye tissues of Drosophila, these findings indicate a possible conservation of the process that patterns the photoreceptive and support structures of the eye.