Many forms of blindness result from the dysfunction or loss of retinal photoreceptors. Induced pluripotent stem cells (iPSCs) hold great potential for the modelling of these diseases or as potential therapeutic agents. However, to fulfill this promise, a remaining challenge is to induce human iPSC to recreate in vitro key structural and functional features of the native retina, in particular the presence of photoreceptors with outer-segment discs and light sensitivity. Here we report that hiPSC can, in a highly autonomous manner, recapitulate spatiotemporally each of the main steps of retinal development observed in vivo and form three-dimensional retinal cups that contain all major retinal cell types arranged in their proper layers. Moreover, the photoreceptors in our hiPSC-derived retinal tissue achieve advanced maturation, showing the beginning of outer-segment disc formation and photosensitivity. This success brings us one step closer to the anticipated use of hiPSC for disease modelling and open possibilities for future therapies.