Establishment of precise 3-dimensional tissue structure is vital for organ function. In the visual system, optic fissure and stalk morphogenesis is a critical, yet poorly understood process, disruptions of which can lead to coloboma, a birth defect causing visual impairment. Here, we use 4-dimensional imaging, cell tracking, and molecular genetics in zebrafish to define cell movements underlying normal optic fissure and stalk formation. We determine how these events are disrupted in a coloboma model in which the Hedgehog receptor ptch2 is lost, resulting in overactive Hh signaling. In the ptch2 mutant, cells exhibit defective motile behaviors and morphology. Cells that should contribute to the fissure do not arrive at their correct position, and instead contribute to an ectopically large optic stalk. Our results suggest that overactive Hh signaling, through overexpression of downstream transcriptional targets, impairs cell motility underlying optic fissure and stalk formation, via non-cell autonomous and cell-autonomous mechanisms. More broadly, our cell motility and morphology analyses provide a new framework to study other coloboma-causing mutations disrupting optic fissure or stalk formation.