A fundamental functional feature of the visual system, one recognized in the very first electrophysiological retinal recordings ever made, is that some cells respond to light increments (On cells) while others are activated by light decrements (Off cells). The circuitry underlying On and Off responses in the mature retina have been well-established. In particular, it is known that the dendrites of On- and Off-center retinal ganglion cells (RGCs) stratify in different sublamina of the inner plexiform layer (IPL), where they are innervated by spatially segregated On- and Off-cone bipolar cell inputs. Also, segregated into On and Off sublaminae of the IPL are the processes of starburst amacrine cells. In some species (notably ferret and mink) the retinogeniculate projections are also segregated into sublayers of the dorsal lateral geniculate nucleus (dlgn). The mature organizational features summarized above arise gradually during the course of normal development. Thus, the dendrites of immature RGCs initially ramify throughout the IPL before becoming stratified into On or Off sublamina. This developmental event is regulated by the release of glutamate by developing bipolar cells. Treating the developing retina with the glutamate analog 2-amino-4-phosphonobutyric acid (APB) has been found to prevent the stratification of RGC dendrites. In the mature retina APB binds with mGluR6 receptors expressed by On cone and rod bipolar cells which hyperpolarizes these retinal interneurons and blocks their release of glutamate. The effects of short-term APB treatment are reversible by subsequent normal visual experience, while those of long-term treatment appear to be permanent. At the time that developing RGCs are multistratified they respond to both light onset as well as light offset, suggesting that these neurons are initially functionally innervated by On as well as Off-cone bipolar cells. In the dark-adapted state, On-Off responses of immature multistratified RGCs are completely blocked by APB, while at maturity only On responses are APB-sensitive. This suggests that an APB-resistant Off pathway (possibly from rods to Off-cone bipolar cells) is formed relatively late in development, after RGCs attain their stratified state. In contrast to the activity-regulated refinement of stratified On and Off RGCs, the segregated ingrowth of On- and Off-cone bipolar cells occurs in a highly specific manner, and is not dependent on the presence of either RGCs or cholinergic amacrine cells. It is suggested that the directed ingrowth of bipolar cell axons is guided by molecular cues expressed in the extracellular matrix whose identity is yet to be established. There is also evidence that the later formation of segregated On and Off retinogeniculate projections in the ferret is regulated by an activity-dependent Hebbian type mechanism. Blockade of RGC discharges as well as NMDA receptors in the dlgn perturbs the formation of such segregated inputs. Moreover, On and Off RGCs show distinct correlated firing patterns during the developmental period when the intermingled projections of these neurons are being sorted into sign specific sublayers. Collectively, the available evidence indicates that different developmental mechanisms operate on the different components of retinal and retinogeniculate On and Off pathways to attain the segregated state characteristic of the mature visual system.