Human embryonic stem cell-derived retinal pigment epithelial cells (hESC-RPE) are a promising cell source to treat age-related macular degeneration (AMD). Despite several ongoing clinical studies, detailed single cell mapping of the transient cellular and molecular dynamics from the pluripotent state to mature RPE has not been performed. Here we conduct single-cell transcriptomic analysis of 25,718 cells during differentiation as well as in fetal and adult retina references, revealing differentiation progression through an unexpected initial cell diversification recapitulating early embryonic development. We also identified that NCAM1 can be used to track and capture an intermediate retinal progenitor with the potential to give rise to multiple neuroepithelial lineages. Finally, we profiled hESC-RPE cells after subretinal transplantation into the rabbit eye, uncovering robust in vivo maturation towards an adult state. Our detailed evaluation of hESC-RPE differentiation strongly supports the development of safe and efficient pluripotent stem cell-based therapies for AMD.