To study the movement of individual cells and development of cell grouping during neurogenesis, we labeled single cells in early Medaka gastrula at stage 13 [13 hours post-fertilization (hpf)] with a fluorescent vital dye, and analyzed cells and their descendants using time-lapse live recording up to stage 24 (44 hpf). At stage 13, all future neural cells were located in a dorsal 140 degrees sector of the embryo, and migrated toward the vegetal pole; but during stage 15 to 16, they converged towards the midline. Cells that contributed to later neural subdivisions initially formed overlapping populations, but after stage 16+ they formed non-overlapping cell groups having characteristics of tissue 'compartments', preceding development of morphologically distinct neural subdivisions. In early retinal development, a single compartment for future retinal cells was formed superficial to telencephalic and diencephalic compartments, but it was split into left and right eye components at stage 17 in parallel with anterodorsal movement of the diencephalic compartment. At stage 16+, when these compartments were established, Pax6 expression initiated, but only in the laterally located subpopulation of the retina precursor. These observations revise the current view of bilateral retinal development. Continuous live recording of labeled single precursor cells and computer graphics-assisted data analysis, which are presented for the first time in this study, provide excellent means with which to analyze essential cellular processes in organogenesis.