The Nbs1 protein, hypomorphic mutant in Nijmegen breakage syndrome (NBS), is a component of the Mre11/Rad50/Nbs1 (M/R/N) complex that acts as a DNA double-strand break sensor and functions in cell cycle checkpoint in response to DNA damage and DNA repair. Here we report that targeted disruption of murine NBS1 gene (Nbn) in the lens alters the M/R/N complex nuclear localization and results in microphthalmia in mice due to reduced proliferation of the lens epithelial cells. Unexpectedly, all Nbn-deficient lenses develop cataracts at an early age due to altered lens fibre cell differentiation, including disruption of normal lens epithelial and fibre cell architecture and incomplete denucleation of fibre cells, and these changes are independent of the p53 pathway. In addition, Nbn-deficient lenses show dysregulated transcription of various crystallins. Thus, this study implicates a novel function of Nbs1 in terminal differentiation of the lens fibre cells and in cataractogenesis.