The specification of retinal cell fate is a multistep process that begins during early development and results from the spatio-temporal coordination of cell cycle, cell differentiation, and morphogenesis. This review focuses on recent advances in understanding the molecular mechanisms underlying the distinct steps of retinal specification. Emphasis is placed on key regulatory events that control the multipotency of retinal progenitors, the generation of cell diversity, and the establishment of the clock that determines the ordered generation of retinal cell types. These basic studies have paved the way to the latest progress on the isolation and in vitro generation of retinal stem cells, which is presented in the light of possible therapeutic applications.