During ocular morphogenesis the retinal pigment epithelium (RPE) and neural retina segregate fates from a bi-potential progenitor pool of cells comprising the optic vesicle. Several transcription factors and signaling pathways have been shown to be important for RPE maintenance and differentiation, but an understanding of the initial fate specification and determination of this ocular cell type is lacking. We show that Yap/Taz-Tead activity is necessary and sufficient for optic vesicle progenitors to adopt RPE identity in zebrafish. In support, a Tead responsive transgene expresses within the domain of the optic cup from which RPE arises and Yap immunoreactivity localizes to nuclei of prospective RPE cells. yap mutants lack a subset of RPE cells and/or exhibit coloboma. Loss of RPE in yap mutants is exacerbated in combination with taz mutant alleles such that when Yap and Taz are both absent, optic vesicle progenitor cells completely lose their ability to form RPE. The mechanism of Yap dependent RPE cell-type determination is reliant on both nuclear localization of Yap and interaction with a Tead co-factor. In contrast to loss of Yap and Taz, overexpression of either protein within optic vesicle progenitors leads to ectopic pigmentation in a dosage-dependent manner. Overall, this study identifies Yap and Taz as key early regulators of RPE genesis and provides a mechanistic framework for understanding the congenital ocular defects of Sveinsson's chorioretinal atrophy and congenital retinal coloboma.