Cited2 is a transcriptional modulator with pivotal roles in different biological processes. Cited2-deficient mouse embryos manifested two major defects in the developing eye. An abnormal corneal-lenticular stalk was characteristic of Cited2(-/-) developing eyes, a feature reminiscent of Peters' anomaly, which can be rescued by increased Pax6 gene dosage in Cited2(-/-) embryonic eyes. In addition, the hyaloid vascular system showed hyaloid hypercellularity consisting of aberrant vasculature, which might be correlated with increased VEGF expression in the lens. Deletion of Hif1a (which encodes HIF-1alpha) in Cited2(-/-) lens specifically eliminated the excessive accumulation of cellular mass and aberrant vasculature in the developing vitreous without affecting the corneal-lenticular stalk phenotype. These in vivo data demonstrate for the first time dual functions for Cited2: one upstream of, or together with, Pax6 in lens morphogenesis; and another in the normal formation of the hyaloid vasculature through its negative modulation of HIF-1 signaling. Taken together, our study provides novel mechanistic revelation for lens morphogenesis and hyaloid vasculature formation and hence might offer new insights into the etiology of Peters' anomaly and ocular hypervascularity.