The LIM-Homeodomain transcription factor Lhx2 is an essential organizer of early eye development and is subsequently expressed in retinal progenitor cells (RPCs). To determine its requirement in RPCs, we performed a temporal series of conditional inactivations in mice with the early RPC driver Pax6 α-Cre and the tamoxifen-inducible Hes1(CreERT2) driver. Deletion of Lhx2 caused a significant reduction of the progenitor population and a corresponding increase in neurogenesis. Precursor fate choice correlated with the time of inactivation; early and late inactivation led to the overproduction of retinal ganglion cells (RGCs) and rod photoreceptors, respectively. In each case, however, the overproduction was selective, occurring at the expense of other cell types and indicating a role for Lhx2 in generating cell type diversity. RPCs that persisted in the absence of Lhx2 continued to generate RGC precursors beyond their normal production window, suggesting that Lhx2 facilitates a transition in competence state. These results identify Lhx2 as a key regulator of RPC properties that contribute to the ordered production of multiple cell types during retinal tissue formation.