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The proneural transcription factor atonal basic helix–loop–helix transcription factor 7 (<i>ATOH7</i>) is expressed in early progenitors in the developing neuroretina. In vertebrates, this is crucial for the development of retinal ganglion cells (RGCs), as mutant animals show an almost complete absence of RGCs, underdeveloped optic nerves, and aberrations in retinal vessel development. Human mutations are rare and result in autosomal recessive optic nerve hypoplasia (ONH) or severe vascular changes, diagnosed as autosomal recessive persistent hyperplasia of the primary vitreous (PHPVAR). To better understand the role of <i>ATOH7</i> in neuroretinal development, we created <i>ATOH7</i> knockout and eGFP-expressing <i>ATOH7</i> reporter human induced pluripotent stem cells (hiPSCs), which were differentiated into early-stage retinal organoids. Target loci regulated by ATOH7 were identified by Cleavage Under Targets and Release Using Nuclease with sequencing (CUT&RUN-seq) and differential expression by RNA sequencing (RNA-seq) of wildtype and mutant organoid-derived reporter cells. Additionally, single-cell RNA sequencing (scRNA-seq) was performed on whole organoids to identify cell type-specific genes. Mutant organoids displayed substantial deficiency in axon sprouting, reduction in RGCs, and an increase in other cell types. We identified 469 differentially expressed target genes, with an overrepresentation of genes belonging to axon development/guidance and Notch signaling. Taken together, we consolidate the function of human <i>ATOH7</i> in guiding progenitor competence by inducing RGC-specific genes while inhibiting other cell fates. Furthermore, we highlight candidate genes responsible for <i>ATOH7</i>-associated optic nerve and retinovascular anomalies, which sheds light to potential future therapy targets for related disorders.