The rd7 mouse is a model for hereditary retinal degeneration characterized clinically by retinal spotting throughout the fundus and late onset retinal degeneration, and histologically by retinal dysplasia manifesting as folds and whorls in the photoreceptor layer. This study demonstrates that the rd7 phenotype results from a splicing error created by a genomic deletion of an intron and part of an exon. Hematoxylin/eosin staining of rd7 tissue shows that the whorls in the outer nuclear layer of the retina do not appear during embryonic development but manifest by postnatal day 12.5 (P12.5). Furthermore, in situ hybridization data indicates that the Nr2e3 message is first present at barely discernable levels at embryonic day 18.5, becomes abundant by P2.5, and reaches maximal adult levels by P10.5. Results from these experiments indicate that Nr2e3 message is expressed prior to the development of S-cones. This data coincides with studies in humans showing that mutations in Nr2e3 result in a unique type of retinal degeneration known as enhanced S-cone syndrome, where patients have a 30-fold increase in S-cone sensitivity compared to normal. Immunohistochemical staining of cone cells demonstrates that rd7 retinas have an increased number of cone cells compared to wild-type retinas. Thus, Nr2e3 may function by regulating genes involved in cone cell proliferation, and mutations in this gene lead to retinal dysplasia and degeneration by disrupting normal photoreceptor cell topography as well as cell-cell interactions.