In this study we dissected retinal organoid morphogenesis in human embryonic stem cell (hESC)-derived cultures and established a convenient method for isolating large quantities of retinal organoids for modeling human retinal development and disease. Epithelialized cysts were generated via floating culture of clumps of Matrigel/hESCs. Upon spontaneous attachment and spreading of the cysts, patterned retinal monolayers with tight junctions formed. Dispase-mediated detachment of the monolayers and subsequent floating culture led to self-formation of retinal organoids comprising patterned neuroretina, ciliary margin, and retinal pigment epithelium. Intercellular adhesion-dependent cell survival and ROCK-regulated actomyosin-driven forces are required for the self-organization. Our data supports a hypothesis that newly specified neuroretina progenitors form characteristic structures in equilibrium through minimization of cell surface tension. In long-term culture, the retinal organoids autonomously generated stratified retinal tissues, including photoreceptors with ultrastructure of outer segments. Our system requires minimal manual manipulation, has been validated in two lines of human pluripotent stem cells, and provides insight into optic cup invagination in vivo.