ABSTRACT: BACKGROUND: Organs are programmed to acquire a particular size during development, but the regulatory mechanisms that dictate when dividing progenitor cells should permanently exit the cell cycle and stop producing additional daughter cells are poorly understood. In differentiated tissues, tumor suppressor genes maintain a constant cell number and intact tissue architecture by controlling proliferation, apoptosis and cell dispersal. Here we report a similar role for two tumor suppressor genes, the Zac1 zinc finger transcription factor and that encoding the cytokine TGFbetaII, in the developing retina. RESULTS: Using loss and gain-of-function approaches, we show that Zac1 is an essential negative regulator of retinal size. Zac1 mutants develop hypercellular retinae due to increased progenitor cell proliferation and reduced apoptosis at late developmental stages. Consequently, supernumerary rod photoreceptors and amacrine cells are generated, the latter of which form an ectopic cellular layer, while other retinal cells are present in their normal number and location. Strikingly, Zac1 functions as a direct negative regulator of a rod fate, while acting cell non-autonomously to modulate amacrine cell number. We implicate TGFbetaII, another tumor suppressor and cytokine, as a Zac1-dependent amacrine cell negative feedback signal. TGFbetaII and phospho-Smad2/3, its downstream effector, are expressed at reduced levels in Zac1 mutant retinae, and exogenous TGFbetaII relieves the mutant amacrine cell phenotype. Moreover, treatment of wild-type retinae with a soluble TGFbeta inhibitor and TGFbeta receptor II (TGFbetaRII) conditional mutants generate excess amacrine cells, phenocopying the Zac1 mutant phenotype. CONCLUSIONS: We show here that Zac1 has an essential role in cell number control during retinal development, akin to its role in tumor surveillance in mature tissues. Furthermore, we demonstrate that Zac1 employs a novel cell non-autonomous strategy to regulate amacrine cell number, acting in cooperation with a second tumor suppressor gene, TGFbetaII, through a negative feedback pathway. This raises the intriguing possibility that tumorigenicity may also be associated with the loss of feedback inhibition in mature tissues.