Rab11 family interacting protein 4 (Rab11-FIP4) was initially identified in humans as an Rab11-binding protein, but its biological function has remained unknown. We cloned the zebrafish orthologue of Rab11-FIP4 (zRab11-FIP4) and analyzed its function in vivo by using antisense morpholino. zRab11-FIP4 was expressed as 2 alternative transcripts, i.e., the longer A-form predominantly expressed in neural tissues and the shorter B-form expressed ubiquitously; and in situ hybridization revealed that the A-form was the dominant form. In the developing retina, zRab11-FIP4 was expressed in progenitors throughout the retina at early stages; and then, along with the differentiation, the expression became gradually restricted to the ganglion cell layer and ciliary marginal zone. zRab11-FIP4A knockdown embryos exhibited eye phenotypes similar to those of the shh mutant, such as a small eye with impaired cell proliferation and the delay in cell-cycle exit and differentiation of retinal progenitors. The lack of induction of p57kip2 and enhanced expression of cyclin D1 were observed in the morphant retina. Importantly, the delay in cell-cycle exit was rescued by ectopic expression of either p57Kip2 or dominant-negative PKA, suggesting that Rab11-FIP4A plays pivotal roles in retinal development by regulating Shh signaling and a mechanism acting in parallel with Shh signaling in the control of cell-cycle exit.