Retinogenesis involves expansion of pluripotent progenitors, specification of postmitotic precursors, and terminal differentiation. Rb or Rb/p107 loss causes retinoblastoma in humans or mice, respectively. One model suggests that Rb- or Rb/p107-deficient retinal precursors have infinite proliferative capacity but are death-prone and must acquire an antiapoptotic mutation. Indeed, we show that Rb/p107 loss does not affect progenitor proliferation or precursor specification, but perturbs cell cycle exit in all seven retinal precursors. However, three precursors survive Rb/p107-loss and stop proliferating following terminal differentiation. Tumors arise from precursors that escape this delayed growth arrest. Thus, retinoblastoma arises from a precursor that has extended, not infinite, proliferative capacity, and is intrinsically death-resistant, not death-prone. We suggest that additional lesions common in retinoblastoma overcome growth arrest, not apoptosis.