<p>All cancers arise from the malignant transformation of normal cells, yet their cells-of-origin remain challenging to identify due to the inability to directly observe dynamic changes in human tumors. Retinoblastoma (Rb), a malignant intraocular cancer, serves as a well-established model for investigating the molecular and cellular mechanisms underlying tumorigenesis. While the maturing cone precursors (CPs) have been proposed as the cellular origin of human Rb, it is unclear whether other retinal cell types are similarly sensitive to <i>RB1</i> inactivation. In this study, we developed <i>RB1</i>-deficient human retinal organoids (ROs) models using <i>RB1</i>^−/− or <i>RB1</i>^+/- human induced pluripotent stem cells (hiPSCs). <i>RB1</i>^−/− hiPSCs generated tumor cells that recapitulated key features of human Rb and formed serial orthotopic xenografts. Importantly, <i>RB1</i> loss induced overproliferation of ATOH7⁺ neurogenic retinal progenitor cells (nRPCs), which disrupted retinal development by generating ectopic dividing early-born retinal cells (retinal ganglion cells and CPs). Single-cell RNA sequencing analysis confirmed that ATOH7⁺/RXRγ⁺ nascent CPs survived and ultimately drove Rb tumorigenesis. In contrast, monoallelic <i>RB1</i> inactivation resulting in low pRB expression did not induce proliferation of nascent CPs, but only triggered overproliferation of nRPCs, leading to a retinocytoma-like phenotype. Finally, a potential therapeutic target for Rb was identified from multi-omics data and validated through knockdown experiment and a small-molecule inhibitor. Our findings demonstrate, for the first time, that nRPCs are the most sensitive cells to <i>RB1</i> loss inducing abnormal proliferation of nascent retinal cells, while ATOH7⁺ nascent CPs represent the earliest cellular origin of human Rb. These insights may facilitate the development of targeted therapies for Rb.</p>