In the mammalian retina, a metabolic ecosystem exists in which photoreceptors acquire glucose from the choriocapillaris with the help of the retinal pigment epithelium (RPE). While the photoreceptor cells are primarily glycolytic, exhibiting Warburg-like metabolism, the RPE is reliant on mitochondrial respiration. However, the ways in which mitochondrial metabolism affect RPE cellular functions are not clear. We first used the human RPE cell line, ARPE-19, to examine mitochondrial metabolism in the context of cellular differentiation. We show that nicotinamide induced rapid differentiation of ARPE-19 cells, which was reversed by removal of supplemental nicotinamide. During the nicotinamide-induced differentiation, we observed using quantitative PCR, Western blotting, electron microscopy, and metabolic respiration and tracing assays that (1) mitochondrial gene and protein expression increased, (2) mitochondria became larger with more tightly folded cristae, and (3) mitochondrial metabolism was enhanced. In addition, we show that primary cultures of human fetal RPE cells responded similarly in the presence of nicotinamide. Furthermore, disruption of mitochondrial oxidation of pyruvate attenuated the nicotinamide-induced differentiation of the RPE cells. Together, our results demonstrate a remarkable effect of nicotinamide on RPE metabolism. We also identify mitochondrial respiration as a key contributor to the differentiated state of the RPE and thus to many of the RPE functions that are essential for retinal health and photoreception.