Neural stem cells/progenitors that give rise to neurons and glia have been identified in different regions of the brain, including the embryonic retina and ciliary epithelium of the adult eye. Here, we first demonstrate the characterization of neural stem/progenitors in postnatal iris pigment epithelial (IPE) cells. Pure isolated IPE cells could form spheres that contained cells expressing retinal progenitor markers in non-adherent culture. The spheres grew by cell proliferation, as indicated by bromodeoxyuridine incorporation. When attached to laminin, the spheres forming IPE derived cells were able to exhibit neural phenotypes, including retinal-specific neurons. When co-cultured with embryonic retinal cells, or grafted into embryonic retina in vivo, the IPE cells could also display the phenotypes of photoreceptor neurons and Muller glia. Our results suggest that the IPE derived cells have retinal stem/progenitor properties and neurogenic potential without gene transfer, thereby providing a novel potential source for both basic stem cell biology and therapeutic applications for retinal diseases.