Wnt/β-catenin signaling is highly active in the dorsal retinal pigment epithelium (RPE) during eye development. To study the role of Wnt/β-catenin signaling in the RPE development we used a conditional Cre/loxP system in mice to inactivate or ectopically activate Wnt/β-catenin signaling in the RPE. Inactivation of Wnt/β-catenin signaling results in transdifferentiation of RPE to neural retina (NR) as documented by downregulation of RPE-specific markers Mitf and Otx2 and ectopic expression of NR-specific markers Chx10 and Rx, respectively. In contrast, ectopic activation of Wnt/β-catenin signaling results in the disruption of the RPE patterning, indicating that precise spatial and temporal regulation of Wnt/β-catenin signaling is required for normal RPE development. Using chromatin immunoprecipitation (ChIP) and reporter gene assays we provide evidence that Otx2 and RPE-specific isoform of Mitf, Mitf-H, are direct transcriptional targets of Wnt/β-catenin signaling. Combined, our data suggest that Wnt/β-catenin signaling plays an essential role in development of RPE by maintaining or inducing expression of Mitf and Otx2.