The molecular mechanisms underlying cell fate determination from common progenitors in the vertebrate CNS remain elusive. We previously reported that the OTX2 homeoprotein regulates retinal photoreceptor cell fate determination. While Otx2 transactivation is a pivotal process for photoreceptor cell fate determination, its transactivation mechanism in the retina is unknown. Here, we identified an evolutionarily conserved Otx2 enhancer of ∼500 bp, named embryonic enhancer locus for photoreceptor Otx2 transcription (EELPOT), which can recapitulate initial Otx2 expression in the embryonic mouse retina. We found that the RAX homeoprotein interacts with EELPOT to transactivate Otx2, mainly in the final cell cycle of retinal progenitors. Conditional inactivation of Rax results in downregulation of Otx2 expression in vivo. We also showed that NOTCH–HES signaling negatively regulates EELPOT to suppress Otx2 expression. These results suggest that the integrated activity of cell-intrinsic and -extrinsic factors on EELPOT underlies the molecular basis of photoreceptor cell fate determination in the embryonic retina.