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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, a detailed mapping of transient cellular states during in vitro differentiation has not been performed. Here, we conduct single-cell transcriptomic profiling of an hESC-RPE differentiation protocol that has been developed for clinical use. Differentiation progressed through a culture diversification recapitulating early embryonic development, whereby cells rapidly acquired a rostral embryo patterning signature before converging toward the RPE lineage. At intermediate steps, we identified and examined the potency of an NCAM1(+) retinal progenitor population and showed the ability of the protocol to suppress non-RPE fates. We demonstrated that the method produces a pure RPE pool capable of maturing further after subretinal transplantation in a large-eyed animal model. Our evaluation of hESC-RPE differentiation supports the development of safe and efficient pluripotent stem cell-based therapies for AMD.