Protein serine/threonine phosphatase-1 (PP-1) is one of the key enzymes responsible for dephosphorylation in vertebrates. Protein dephosphorylation via PP-1 is implicated in many different biological processes including gene expression, cell cycle control, transformation, neuronal transmission, apoptosis, autophage and senescence. However, whether PP-1 directly controls animal development remains to be investigated. Here, we present direct evidence to show that PP-1 plays an essential role in regulating eye development of vertebrates. Using goldfish as a model system, we have shown the following novel results. First, inhibition of PP-1 activity leads to death of a majority of the treated embryos, and the survived embryos displayed severe phenotype in the eye. Second, knockdown of each catalytic subunit of PP-1 with morpholino oligomers leads to partial (PP-lα knockdown) or complete (PP-lβ or PP-lγ knockdown) death of the injected embryos. The survived embryos from PP-1α knockdown displayed clear retardation in lens differentiation. Finally, overexpression of each subunit of PP-1 also causes death of majority of the injected embryos and leads to abnormal development of goldfish eye. Mechanistically, Pax-6 is one of the major downstream targets mediating the effects of PP-1 function since the eye phenotype in Pax-6 knockdown fish is similar to that derived from overexpression of PP-1. Together, our results for the first time provide direct evidence that protein phosphatase-1 plays a key role in governing normal eye formation during goldfish development.