Myelin Regulatory Factor (MYRF) regulates retinal pigment epithelial (RPE) development and variants in the C-terminus are linked to isolated nanophthalmos, while loss-of-function variants cause syndromic disease. To define the molecular mechanism of this discrepancy, in vitro and animal studies were performed on a pathogenic C-terminal variant (p.Gly1126fs30* or dG-MYRF). ARPE-19 cells transduced with dG-MYRF revealed reduced target gene expression compared to WT-MYRF, with reduced steady state levels of C-terminal MYRF cleavage product, but intact cleavage and localization. A homozygous humanized MYRF C-terminal ( Myrf humdG/humdG ) mouse model was embryonic lethal by embryonic day (E) 18.5, while humanized wildtype ( Myrf humWT/humWT ) showed normal expression and survival. Bioinformatic analysis on integrated single cell RNA-seq from humanized E17.5 and knockout Rx-Cre;Myrf fl/fl (E15.5 and P0) mice supported shared differentially expressed genes with decreased effect size in Myrf humdG/humdG eyes. These findings, and the viability differences, support that dG-MYRF is a hypomorphic allele. Further, two novel MYRF splicing variants were identified in families with isolated nanophthalmos, with one confirmed to alter 40% of spliced transcripts, creating a nonfunctional isoform. These cases corroborate that isolated nanophthalmos results from hypomorphic alleles of MYRF, supporting a tissue-specific threshold effect and suggests that the C-terminus has unique roles in the RPE.