Three retinaldehyde dehydrogenase genes (Raldh1, Raldh2, and Raldh3) expressed in unique spatiotemporal patterns may control synthesis of retinoic acid (RA) needed for retina development. However, previous studies indicate that retina formation still proceeds normally in Raldh1-/- mouse embryos lacking RA synthesis in the dorsal neural retina at the optic cup stage. Here, we demonstrate that Raldh2-/- embryos lacking RA synthesis in the optic vesicle exhibit a failure in retina invagination needed to develop an optic cup. This was also observed in Raldh1-/-:Raldh2-/- double mutants, which develop similarly. Both mutants retain RA activity in the lens placode associated with Raldh3 expression, but this RA activity is insufficient to induce optic cup formation. Maternal RA administration at the optic vesicle stage rescues optic cup formation in Raldh2-/- and Raldh1-/-:Raldh2-/- embryos, demonstrating that Raldh1 is not required during rescue of optic cup development. The optic cup of rescued Raldh1-/-:Raldh2-/- embryos exhibits normal RA activity and this is associated with Raldh3 expression in the retina and lens. Thus, RA signaling initiates in the optic vesicle in response to Raldh2 but can be maintained during optic cup formation by a gene other than Raldh1, most likely Raldh3. Loss of optic vesicle RA signaling does not effect expression of early determinants of retina at the optic vesicle stage (Pax6, Six3, Rx, Mitf). Our findings suggest that RA functions as one of the signals needed for invagination of the retina to generate an optic cup.