We have examined the relative role of afferents and targets in pattern formation using a novel preparation, in which retinal projections in ferrets are induced to innervate the medial geniculate nucleus (MGN). We find that retinal projections to the MGN are arranged in scattered clusters. Clusters arising from the ipsilateral eye are frequently adjacent to, but spatially segregated from, clusters arising from the contralateral eye. Both clustering and eye-specific segregation in the MGN arise as a refinement of initially diffuse and overlapped projections. The shape, size, and orientation of retinal terminal clusters in the MGN closely match those of relay cell dendrites arrayed within fibrodendritic laminae in the MGN. We conclude that specific aspects of a projection system are regulated by afferents and others by targets. Clustering of retinal projections within the MGN and eye-specific segregation involve progressive remodeling of retinal axon arbors, over a time period that closely parallels pattern formation by retinal afferents within their normal target, the lateral geniculate nucleus (LGN). Thus, afferent-driven mechanisms are implicated in these events. However, the termination zones are aligned within the normal cellular organization of the MGN, which does not differentiate into eye-specific cell layers similar to the LGN. Thus, target-driven mechanisms are implicated in lamina formation and cellular differentiation.