Retinal pigment epithelial (RPE) cells are central to retinal health and homoeostasis. Dysfunction or death of RPE cells underlies many age-related retinal degenerative disorders particularly age-related macular degeneration. During aging RPE cells decline in number, suggesting an age-dependent cell loss. RPE cells are considered to be postmitotic, and how they repair damage during aging remains poorly defined. We show that RPE cells increase in size and become multinucleate during aging in C57BL/6J mice. Multinucleation appeared not to be due to cell fusion, but to incomplete cell division, that is failure of cytokinesis. Interestingly, the phagocytic activity of multinucleate RPE cells was not different from that of mononuclear RPE cells. Furthermore, exposure of RPE cells in vitro to photoreceptor outer segment (POS), particularly oxidized POS, dose-dependently promoted multinucleation and suppressed cell proliferation. Both failure of cytokinesis and suppression of proliferation required contact with POS. Exposure to POS also induced reactive oxygen species and DNA oxidation in RPE cells. We propose that RPE cells have the potential to proliferate in vivo and to repair defects in the monolayer. We further propose that the conventionally accepted 'postmitotic' status of RPE cells is due to a modified form of contact inhibition mediated by POS and that RPE cells are released from this state when contact with POS is lost. This is seen in long-standing rhegmatogenous retinal detachment as overtly proliferating RPE cells (proliferative vitreoretinopathy) and more subtly as multinucleation during normal aging. Age-related oxidative stress may promote failure of cytokinesis and multinucleation in RPE cells.