Correct formation of the corneal endothelium is essential for continued development of the anterior segment of the eye. Corneal endothelial development is initiated at E12 when precursor peri-ocular mesenchyme cells migrate into the space between the lens and the presumptive corneal epithelium and begin to respond to signals from the lens, undergoing a mesenchymal to epithelial transition (MET) that is complete by E15.5. To study the initiation of MET, peri-ocular mesenchyme cell lines were derived from E12.5 and E13.5 murine embryos. These cells expressed key transcription factors, Foxc1 and Pitx2, as well as Slug and Tsc22, genes involved in MET. We have shown that all these genes must be down-regulated by E13.5 for differentiation to proceed. Lens-derived signals play a role in this down-regulation with Tgfβ2 specifically down-regulating Foxc1 and Pitx2. Over-expression and knock-down of Foxc1 significantly and similarly affected the expression of Pitx2, Tsc22 and Slug while Foxc1 was shown to play a role in mediating the lens effects on Slug. Thus, for the progression of initial corneal endothelial development, the key transcription factors, Foxc1 and Pitx2, as well as genes involved in MET, Slug and Tsc-22, must be down-regulated, a process driven by the lens and Foxc1.