Otx family homeoproteins Otx2 and Crx are expressed in photoreceptor precursor cells and bind to the common DNA-binding consensus sequence, but these two proteins have distinct functions in retinal development. To examine the functional substitutability of Otx2 and Crx, we generate knockin mouse lines in which Crx is replaced by Otx2 and vice versa. We find that Otx2 and Crx cannot be substituted in photoreceptor development. Subsequently, we investigate the function of Otx2 in photoreceptor and bipolar cell development. High Otx2 levels induce photoreceptor cell fate but not bipolar cell fate, whereas reduced Otx2 expression impairs bipolar cell maturation and survival. Furthermore, we identify Otx2 and Crx in the lamprey genome by using synteny analysis, suggesting that the last common ancestor of vertebrates possesses both Otx2 and Crx. We find that the retinal Otx2 expression pattern is different between lampreys and mice, suggesting that neofunctionalization of Otx2 occurred in the jawed vertebrate lineage.