The small GTPase CDC42 has pleiotropic functions during development and in the adult. These functions include intra- as well as intercellular tasks such as organization of the cytoskeleton and, at least in epithelial cells, formation of adherens junctions. To investigate CDC42 in the neuronal retina, we generated retina-specific Cdc42-knockdown mice (Cdc42-KD) and analyzed the ensuing consequences for the developing and postnatal retina. Lack of CDC42 affected organization of the developing retina as early as E17.5, prevented correct tissue lamination, and resulted in progressive retinal degeneration and severely reduced retinal function of the postnatal retina. Despite the disorganization of the retina, formation of the primary vascular plexus was not strongly affected. However, both deeper vascular plexi developed abnormally with no clear layering of the vessels. Retinas of Cdc42-KD mice showed increased expression of pro-survival, but also of pro-apoptotic and pro-inflammatory genes and exhibited prolonged Müller glia hypertrophy. Thus, functional CDC42 is important for correct tissue organization already during retinal development. Its absence leads to severe destabilization of the postnatal retina with strong degeneration and loss of retinal function.