The transcription factors Pax6 and Sox2 have been implicated in early events in lens induction and have been proposed to cooperate functionally. Here, we investigated the activity of Sox2 in lens induction and its genetic relationship to Pax6 in the mouse. Conditional deletion of Sox2 in the lens placode arrests lens development at the pit stage. As previously shown, conditional deletion of Pax6 in the placode eliminates placodal thickening and lens pit invagination. The cooperative activity of Sox2 and Pax6 is illustrated by the dramatic failure of lens and eye development in presumptive lens conditional, compound Sox2, Pax6 heterozygotes. The resulting phenotype resembles that of germ line Pax6 inactivation, and the failure of optic cup morphogenesis indicates the importance of ectoderm-derived signals for all aspects of eye development. We further assessed whether Sox2 and Pax6 were required for N-cadherin expression at different stages of lens development. N-cadherin was lost in Sox2-deficient but not Pax6-deficient pre-placodal ectoderm. By contrast, after the lens pit has formed, N-cadherin expression is dependent on Pax6. These data support a model in which the mode of Pax6-Sox2 inter-regulation is stage-dependent and suggest an underlying mechanism in which DNA binding site availability is regulated.