During retinal development, photoreceptors and bipolar cells express the transcription factor Otx2. Blimp1 is transiently expressed in Otx2+ cells. Blimp1 deletion results in excess bipolar cell formation at the expense of photoreceptors. In principle, Blimp1 could be expressed only in Otx2+ cells that are committed to photoreceptor fate. Alternatively, Blimp1 could be expressed broadly in Otx2+ cells and silenced to allow bipolar cell development. To distinguish between these alternatives, we followed the fate of Blimp1 expressing cells using Blimp1-Cre mice and Lox-Stop-Lox reporter strains. We observed that Blimp1+ cells gave rise to all photoreceptors, but also to one third of bipolar cells, consistent with the latter alternative: that Blimp1 inhibits bipolar competence in Otx2+ cells and must be silenced to allow bipolar cell generation. To further test this hypothesis, we looked for transitioning rod photoreceptors in Blimp1 conditional knock-out (CKO) mice carrying the NRL-GFP transgene, which specifically labels rods. Control animals lacked NRL-GFP+ bipolar cells. In contrast, about half of the precociously generated bipolar cells in Blimp1 CKO mice co-expressed GFP, suggesting that rods become re-specified as bipolar cells. Birthdating analyses in control and Blimp1 CKO mice showed that bipolar cells were birthdated as early as E13.5 in Blimp1 CKO mice, five days before this cell type was generated in the wild-type retina. Taken together, our data suggest that early Otx2+ cells upregulate photoreceptor and bipolar genes, existing in a bistable state. Blimp1 likely forms a cross-repressive network with pro-bipolar factors such that the winner of this interaction stabilizes the photoreceptor or bipolar state, respectively.