Postnatal cortical circuit development is characterized by windows of heightened plasticity that contribute to the acquisition of mature connectivity and function. What drives the transition between different critical plasticity windows is not known. Here we show that a switch in sign of inhibitory plasticity correlates with the reported transition between the precritical period (pre-CP) and the critical period (CP) for ocular dominance plasticity (ODP). In layer 4 of binocular visual cortex (V1b), depression of inhibitory synapses onto pyramidal neurons is induced when rats are monocularly deprived for 2 d at the end of the third postnatal week (pre-CP), whereas potentiation is induced if the monocular deprivation is started in the fourth postnatal week (CP). The magnitude of potentiation increases with deprivations started close to the peak of the CP for ODP. The direction of inhibitory plasticity depends on the differential manipulation of circuits activated by the two eyes. During development, these two forms of plasticity shift the balance between excitation and inhibition of the circuit in opposite directions, whereas the excitatory synaptic drive remains unaffected. Inhibitory plasticity is thus fundamental in modulating cortical circuit refinement and might be one of the mechanisms promoting ocular dominance shifts.