The ionic mechanism of horizontal cell potentials was investigated in the isolated retina of the axolotl Ambystoma mexicanum. The membrane potentials of both receptors and horizontal cells were recorded intracellularly while the ionic composition of the medium flowing over the receptor side of the retina was changed. The membrane potential of the horizontal cell is highly depender side of the retina was changed. The membrane potential of the horizontal cell is highly dependent on the extracellular concentration of sodium. When the external ion concentration of either chloride or potassium was changed independently of the other, there were shifts in the membrane potential of the horizontal cell which could not be explained by changes in the equilibrium potential of these ions. If the external concentrations of both potassium and chloride ions were varied so that the product of their external concentrations did not change, the shift in the membrane potential of the horizontal cell was in the direction predicted by the Nernst equation. The results are consistent with the suggestion that in the dark the receptors release a synaptic transmitter which increases primarily the sodium conductance of the horizontal cell postsynaptic membrane.