We have shown that embryonic retina contains progenitors which display stem cell properties in vitro. These cells are proliferative and in addition to expressing the neuroectodermal marker, nestin, are multipotential. These properties and the fact that the putative stem cells can differentiate as photoreceptors when exposed to conducive environment identify them as a viable transplantation reagents to address degenerative retinal diseases. Here we report the survival and differentiation of cultured retinal progenitors upon subretinal transplantation. The retinal progenitor grafts, either as neural spheres or in the form of dissociated cells, survived without disrupting the morphology and laminar organization of the host retina. They did not form rosettes, the morphological barrier to the reconstruction of the normal anatomy of the retina. In addition, transplanted progenitors expressed photoreceptor-specific markers, suggesting that progenitors have the potential to differentiate as photoreceptors. Our observations suggest that cultured retinal progenitors can be a viable reagents for therapeutic transplantation.