The advent of the ocular and nervous system in metazoan evolution coincides with the diversification of a single ancestral paired box (Pax) gene into Pax6, Pax6(5a), and Pax2. To investigate the role of these Pax genes in neural development, we have generated an allelic series of knock-in models at the Pax6 locus. We showed that although Pax6(5a) and Pax2 could not replace Pax6 for its autoregulation in lens induction or for neural differentiation in retina, Pax6(5a) was sufficient for corneal-lenticular detachment. In brain development, cell proliferation in the cerebral cortex and dorsoventral patterning of the telencephalon and neural tube were partially rescued in either knock-in mutant. Contrary to the previous belief, our genetic studies showed that the Pax6 isoform Pax6(5a) could potentially play a role in neuronal differentiation in brain development. Importantly, Pax2 showed greater rescue efficiency than Pax6(5a) in the telencephalon even though the latter was identical to Pax6 outside the paired domain. In studying Ngn2, a Pax6 direct target gene in telencephalon, we showed that the level of Ngn2 expression correlated with the in vitro binding of Pax2, Pax6, and Pax6(5a) paired domain on its enhancer. Our results show that Pax6 is uniquely required for eye development, but in brain development, Pax6 can be functionally substituted by related Pax family genes that share a similar paired domain binding specificity.