Nijmegen breakage syndrome (NBS) is a genomic instability disease caused by hypomorphic mutations in the NBS1 gene encoding the Nbs1 (nibrin) protein. Nbs1 is a component of the Mre11/Rad50/Nbs1 (MRN) complex that acts as a sensor of double strand breaks (DSBs) in the DNA and is critical for proper activation of the broad cellular response to DSBs. Conditional disruption of the murine ortholog of the human NBS1, Nbs1, in the CNS of mice was previously reported to cause microcephaly, severe cerebellar atrophy and ataxia. Here we report that conditional targeted disruption of the murine NBS1 gene in the CNS results in mal-development, degeneration, disorganization and dysfunction of the murine visual system, especially in the optic nerve. Nbs1 deletion resulted in reduced diameters of Nbs1-CNS-Delta eye and optic nerve. MRI analysis revealed defective white matter development and organization. Nbs1 inactivation altered the morphology and organization of the glial cells. Interestingly, at the age of two-month-old the levels of the axonal guidance molecule semaphorin-3A and its receptor neuropilin-1 were up-regulated in the retina of the mutant mice, a typical injury response. Electroretinogram analysis revealed marked reduction in a- and b-waves, indicative of decreased retinal function. Our study points to a novel role for Nbs1 in the development, organization and function of the visual system.