The mab-21 gene was first identified because of its requirement for ray identity specification in Caenorhabditis elegans. It is now known to constitute a family of genes that are highly conserved from vertebrates to invertebrates, and two homologues Mab21l1 and Mab21l2 have been identified in many species. Here we describe the generation of Mab21l2-deficient mice, which have defects in eye and body wall formation. The mutant mouse eye has a rudimentary retina, as a result of insufficient invagination of the optic vesicle due to deficient proliferation, causing the absence of lens. The defects in optic vesicle development correlate with reduced expression of Chx10, which is also required for retina development; Rx, Lhx2, and Pax6 expression is not significantly affected. We conclude that Mab21l2 expression is essential for optic vesicle growth and formation of the optic cup, its absence causing reduced expression of Chx10. Mutant mice also display abnormal extrusion of abdominal organs, defects in ventral body wall formation, resulting in death in utero at mid-gestational stage. Our results reveal that Mab21l2 plays crucial roles in retina and in ventral body wall formation.