Disclosed is a method for inducing stem cells to differentiate into retinal cells at high yield within a short period of time, without gene implantation and co-culture with retinal tissues, by implementing a differentiation process similar to the in vivo embryonic development in chemically defined conditions. Also, retinal cells including the photoreceptor cells and their progenitor cells, and various types of other retinal cells, generated according to the method, are disclosed. A composition comprising the retinal cells and a method are provided for treating retinal degeneration-related diseases. The differentiated photoreceptor cells, when transplanted into degenerated or injured retinas, can be engrafted and fused within the retinas to prevent or cure retinal degeneration.