Acts as a transcriptional regulator through binding to DNA at the consensus sequence 5'-[TC]TAATT[AG][AG]-3' upstream of gene promoters (PubMed:27301076). Plays a significant role in the specification and morphogenesis of the sensory retina (By similarity). May play a role in specification of V2a interneurons during spinal cord development (By similarity). Mediates differentiation of V2a interneurons by repression of motor neuron gene transcription, via competitively binding to response elements that are activated by the ISL1-LHX3 complex, such as VSX1 (PubMed:17919464, PubMed:27477290). Acts as a positive transcriptional regulator of NXNL1; regulation is significantly increased in synergy with VSX1 (By similarity). Acts as a negative transcriptional regulator of MITF (By similarity). Represses SAG transcription by competitive inhibition of ISL1-LHX3 response elements (PubMed:16236706, PubMed:27477290). Binds to the photoreceptor conserved element-1 (PCE-1) in the promoter of rod photoreceptor arrestin SAG and acts as a transcriptional repressor (By similarity). Involved in the development of retinal ganglion cells (RGCs) which leads to release of SHH by RGCs, promoting Hedgehog signaling and subsequent proliferation of retinal progenitor cells (By similarity). Participates in the development of the cells of the inner nuclear layer, by promoting postnatal differentiation of bipolar cells with a comparable inhibition of rod cell differentiation (By similarity). May play a role in the maintenance of neural retina identity during development by regulation of canonical Wnt genes and CTNNB1 localization, suggesting a role in the regulation of canonical Wnt signaling (PubMed:27301076). {ECO:0000250|UniProtKB:Q61412, ECO:0000269|PubMed:16236706, ECO:0000269|PubMed:17919464, ECO:0000269|PubMed:27301076, ECO:0000269|PubMed:27477290}. This is the function of VSX2 (visual system homeobox 2, Ensembl gene identifier ENSG00000119614).