Suppressor of cytokine signaling 3 (SOCS3) is an intracellular, ligand-induced negative feedback modulator of STAT3 activation that acts during inflammation. Here, we demonstrate that SOCS3 expression is important for normal retinal development in the perinatal period. STAT3 is highly activated in the late-embryonic retina, then downregulated at postnatal day 0 (P0), presumably by the depletion of upstream ligands. We found that SOCS3 was required after P0 to shut down the residual STAT3 activation; this loss of activated STAT3 leads to Rhodopsin expression and rod photoreceptor cell differentiation. SOCS3 deficiency failed to terminate STAT3 activation, thereby delaying expression of Rhodopsin and its upstream transcription factor, crx. Development subsequently continued, but its course was temporally erratic, probably because of faulty compensation. Interestingly, SOCS3 protein expression was first detected postnatally, after STAT3 activation was mostly downregulated. It initially appeared in some of the presumptive photoreceptor cells and gradually spread. SOCS3 mRNA level was constant from the late-embryonic to early-postnatal period. Post-transcriptional inhibition of SOCS3 protein expression maintains a high STAT3 activation during late embryogenesis, and after P0, releasing from the inhibition promptly terminates STAT3 activation. Thus, SOCS3 can act as a temporal fine-tuner of STAT3 activation during photoreceptor cell differentiation.