The vertebrate eye anlage grows out of the brain and folds into bilayered optic cups. The eye is patterned along multiple axes, precisely controlled by genetic programs, to delineate neural retina, pigment epithelium, and optic stalk tissues. Pax genes encode developmental regulators of key morphogenetic events, with Pax2 being essential for interpreting inductive signals, including in the eye. PAX2 mutations cause ocular coloboma, when the ventral optic fissure fails to close. Previous studies established that Pax2 is necessary for fissure closure and to maintain the neural retina -- glial optic stalk boundary. Using a Pax2^GFP/+ knock-in allele we discovered that the mutant optic nerve head (ONH) lacks molecular boundaries with the retina and RPE, rendering the ONH larger than normal. This was preceded by ventronasal cup mispatterning, a burst of overproliferation and followed by optic cup apoptosis. Our findings support the hypothesis that ONH cells are tripotential, requiring Pax2 to remain committed to glial fates. This work extends current models of ocular development, contributes to broader understanding of tissue boundary formation and informs the underlying mechanisms of human coloboma.