Neural activity is critical for sculpting the intricate circuits of the nervous system from initially imprecise neuronal connections. Disrupting the formation of these precise circuits may underlie many common neurodevelopmental disorders, ranging from subtle learning disorders to pervasive developmental delay. The necessity for sensory-driven activity has been widely recognized as crucial for infant brain development. Recent experiments in neurobiology now point to a similar requirement for endogenous neural activity generated by the nervous system itself before sensory input is available. Here we use the formation of precise neural circuits in the visual system to illustrate the principles of activity-dependent development. Competition between the projections from lateral geniculate nucleus neurons that receive sensory input from the two eyes shapes eye-specific connections from an initially diffuse projection into ocular dominance columns. When the competition is altered during a critical period for these changes, by depriving one eye of vision, the normal ocular dominance column pattern is disrupted. Before ocular dominance column formation, the highly ordered projection from retina to lateral geniculate nucleus develops. These connections form before the retina can respond to light, but at a time when retinal ganglion cells spontaneously generate highly correlated bursts of action potentials. Blockade of this endogenous activity, or biasing the competition in favor of one eye, results in a severe disruption of the pattern of retinogeniculate connections. Similar spontaneous, correlated activity has been identified in many locations in the developing central nervous system and is likely to be used during the formation of precise connections in many other neural systems. Understanding the processes of activity-dependent development could revolutionize our ability to identify, prevent, and treat developmental disorders resulting from disruptions of neural activity that interfere with the formation of precise neural circuits.