Animals adapted to dark ecotopes may experience selective pressure for retinal reduction. No previous studies have explicitly addressed the molecular basis of retinal development in any fossorial mammal. We studied retinal development and function in the Iberian mole Talpa occidentalis, which was presumed to be blind because of its permanently closed eyes. Prenatal retina development was relatively normal, with specification of all cell types and evidence of dorsoventral regionalization. Severe developmental defects occurred after birth, subsequent to lens abnormalities. "Blind" Iberian moles had rods, cones and rod nuclear ultrastructure typical of diurnal mammals. DiI staining revealed only contralateral projections through the optic chiasm. Y-maze experiments demonstrated that moles retain a photoavoidance response. Over-representation of melanopsin-positive retinal ganglion cells that mediate photoperiodicity was observed. Hence, molecular pathways of eye development in Iberian moles retain the adaptive function of rod/cone primary vision and photoperiodicity, with no evidence that moles are likely to completely lose their eyes on an evolutionary time scale.