The typical mammalian visual system is based upon three photoreceptor types: rods for dim light vision and two types of cones (M and S) for color vision in daylight. However, the process that generates photoreceptor diversity and the cell type in which diversity arises remain unclear. Mice deleted for thyroid hormone receptor β2 (TRβ2) and neural retina leucine zipper factor (NRL) lack M cones and rods, respectively, but gain S cones. We therefore tested the hypothesis that NRL and TRβ2 direct a common precursor to a rod, M cone, or S cone outcome using Nrl(b2/b2) "knock-in" mice that express TRβ2 instead of NRL from the endogenous Nrl gene. Nrl(b2/b2) mice lacked rods and produced excess M cones in contrast to the excess S cones in Nrl(-/-) mice. Notably, the presence of both factors yielded rods in Nrl(+/b2) mice. The results demonstrate innate plasticity in postmitotic rod precursors that allows these cells to form three functional photoreceptor types in response to NRL or TRβ2. We also detected precursor cells in normal embryonic retina that transiently coexpressed Nrl and TRβ2, suggesting that some precursors may originate in a plastic state. The plasticity of the precursors revealed in Nrl(b2/b2) mice suggests that a two-step transcriptional switch can direct three photoreceptor fates: first, rod versus cone identity dictated by NRL, and second, if NRL fails to act, M versus S cone identity dictated by TRβ2.