Retinal dysplasia is a failure in normal retinal development. The morphologic sequence of the dysplastic processes was examined in fetuses and neonates from dogs affected with an inherited form of retinal dysplasia. The dysplastic change has its onset at 45-50 days' gestation and is most prominent in the dorsal peripapillary retina. Morphologic characteristics of involved sensory retina include the focal loss of cell junctions forming the external limiting membrane, folding of the sensory retina, disorganized proliferation of neuroblasts in the retina and subretinal space, and formation of rosettes composed of multiple layers of neuroblasts. These morphologic changes suggest that there is an intrinsic abnormality of neural retinal differentiation.