Postsynaptic to photoreceptors, horizontal cells face prolonged exposure to glutamate in the dark. Therefore, efficient hyperpolarizing mechanisms are crucial to keep horizontal cells within an operating range and to reduce glutamate-induced excitotoxicity. Combining electrophysiology, single-cell reverse transcriptase polymerase chain reaction, and immunocytochemistry, we found that horizontal cell bodies but not their axon terminals express the ether-à-gogo-related gene isoform 1 (erg1) K(+) channel. Erg1-mediated outward currents displayed voltage-dependent activation and C-type inactivation. Recovery from inactivation involved a transient open state. Gating of erg1 channels kept the voltage response to glutamate brief and at physiological amplitudes. With erg1 channels blocked, the response of horizontal cells to the onset of darkness was significantly enhanced. These results indicate a functional dichotomy between horizontal cell bodies and axon terminals in the processing of photoreceptor signals. The dark response thus reflects a finely tuned balance determined by the successive gating of ionotropic glutamate receptors and erg1 channels.