Before vision, a transient network of recurrently connected cholinergic interneurons, called starburst amacrine cells (SACs), generates spontaneous retinal waves. Despite an absence of robust inhibition, cholinergic retinal waves initiate infrequently and propagate within finite boundaries. Here, we combine a variety of electrophysiological and imaging techniques and computational modeling to elucidate the mechanisms underlying these spatial and temporal properties of waves in developing mouse retina. Waves initiate via rare spontaneous depolarizations of SACs. Waves propagate through recurrent cholinergic connections between SACs and volume release of ACh as demonstrated using paired recordings and a cell-based ACh optical sensor. Perforated-patch recordings and two-photon calcium imaging reveal that individual SACs have slow afterhyperpolarizations that induce SACs to have variable depolarizations during sequential waves. Using a computational model in which the properties of SACs are based on these physiological measurements, we reproduce the slow frequency, speed, and finite size of recorded waves. This study represents a detailed description of the circuit that mediates cholinergic retinal waves and indicates that variability of the interneurons that generate this network activity may be critical for the robustness of waves across different species and stages of development.