DNA hydroxymethylation has recently been shown to play critical roles in regulating gene expression and terminal differentiation events in a variety of developmental contexts. However, little is known about its function during eye development. Methylcytosine dioxygenases of the Tet family convert 5-methylcytosine (5mC) to 5-hydroxymethylcytosine (5hmC), an epigenetic mark thought to serve as a precursor for DNA demethylation and as a stable mark in neurons. Here, we report a requirement for Tet activity during zebrafish retinal neurogenesis. In tet2-/-;tet3-/- mutants, retinal neurons are specified but most fail to terminally differentiate. While differentiation of the first born retinal neurons, the retinal ganglion cells (RGCs), is less affected in tet2-/-;tet3-/- mutants than other retinal cell types, the majority of RGCs do not undergo terminal morphogenesis and form axons. Moreover, the few photoreceptors that differentiate in tet2-/-;tet3-/- mutants fail to form outer segments, suggesting that Tet function is also required for terminal morphogenesis of differentiated retinal neurons. Mosaic analyses revealed a surprising cell non-autonomous requirement for tet2 and tet3 activity in facilitating retinal neurogenesis. Through a combination of candidate gene analysis, transcriptomics and pharmacological manipulations, we identified the Notch and Wnt pathways as cell-extrinsic pathways regulated by tet2 and tet3 activity during RGC differentiation and morphogenesis. Transcriptome analyses also revealed the ectopic expression of non-retinal genes in tet2-/-;tet3-/- mutant retinae, and this correlated with locus-specific reduction in 5hmC. These data provide the first evidence that Tet-dependent regulation of 5hmC formation is critical for retinal neurogenesis, and highlight an additional layer of complexity in the progression from retinal progenitor cell to differentiated retinal neuron during development of the vertebrate retina.