A crucial step in eye organogenesis is the transition of the optic vesicle into the optic cup. Several transcription factors and extracellular signals mediate this transition, but whether a single factor links them into a common genetic network is unclear. Here, we provide evidence that the LIM homeobox gene Lhx2, which is expressed in the optic neuroepithelium, fulfils such a role. In Lhx2(-/-) mouse embryos, eye field specification and optic vesicle morphogenesis occur, but development arrests prior to optic cup formation in both the optic neuroepithelium and lens ectoderm. This is accompanied by failure to maintain or initiate the expression patterns of optic-vesicle-patterning and lens-inducing determinants. Of the signaling pathways examined, only BMP signaling is noticeably altered and Bmp4 and Bmp7 mRNAs are undetectable. Lhx2(-/-) optic vesicles and lens ectoderm upregulate Pax2, Fgf15 and Sox2 in response to BMP treatments, and Lhx2 genetic mosaics reveal that transcription factors, including Vsx2 and Mitf, require Lhx2 cell-autonomously for their expression. Our data indicate that Lhx2 is required for optic vesicle patterning and lens formation in part by regulating BMP signaling in an autocrine manner in the optic neuroepithelium and in a paracrine manner in the lens ectoderm. We propose a model in which Lhx2 is a central link in a genetic network that coordinates the multiple pathways leading to optic cup formation.