Precise control of the relative ratio of retinal neurons and glia generated during development is essential for visual function. We show that Lhx2, which encodes a LIM-homeodomain transcription factor essential for specification and differentiation of retinal Müller glia, also plays a critical role in the development of retinal neurons. Overexpression of Lhx2 with its transcriptional coactivator Ldb1, triggers cell cycle exit and inhibits both Notch signaling and retinal gliogenesis. Lhx2/Ldb1 overexpression also induced the formation of wide-field amacrine cells (wfACs). In contrast Rnf12, which encodes a negative regulator of LDB1, is necessary for the initiation of retinal gliogenesis. We also show that Lhx2-dependent neurogenesis and wfAC formation requires Ascl1 and Neurog2, and that Lhx2 is necessary for their expression, although overexpression of Lhx2/Ldb1 does not directly elevate expression of these proneural bHLH factors. Finally, we demonstrate that the relative level of the LHX2-LDB1 complex in the retina decreases in tandem with the onset of gliogenesis. These findings show that control of Lhx2 function by Ldb1 and Rnf12 underpins the coordinated differentiation of neurons and Müller glia in postnatal retina.