Neural deficits suggestive of involvement of the GABA signaling pathway can often be detected early in the course of diabetic retinopathy, a leading cause of blindness in the United States. To examine in greater detail the nature of the neuronal changes associated with hyperglycemia, we investigated GABA receptor activity on retinal bipolar cells in streptozotocin-induced diabetic rats; cells from age-matched normal rats served as controls. Patch-clamp recordings from isolated rod-bipolar cells revealed that diabetes enhanced the whole cell currents elicited by GABA. Responses of the GABA(C) receptor, the predominant GABA receptor on rat rod bipolar cells, exhibited a greater sensitivity to GABA, larger maximum current responses, slower response kinetics, and a smaller single channel conductance among diabetic cells relative to those recorded from normal controls. Compared with the properties of homomeric rho1 and heteromeric rho1rho2 receptors formed in a heterologous expression system, these results suggested that there was a greater contribution from the rho1 subunit in the GABA(C) receptor-mediated response of diabetic cells. The levels of mRNA, measured with real-time RT-PCR, were consistent with this finding. There was a significant enhancement in the ratio of rho1/rho2 subunit expression in the retina of diabetic animals, although the levels of GABA rho1 subunit expression were comparable in diabetic and normal retinas. Taken together, the results suggest that diabetes modifies the subunit composition of the GABA(C) receptor on retinal neurons, most likely through its effect on the efficacy of gene transcription.