One general categorization of retinal ganglion cells is to segregate them into tonically or phasically responding neurons, each conveying discrete aspects of the visual scene. Although best identified in the output signals of the retina, this distinction is initiated at the first synapse: between photoreceptors and the dendrites of bipolar cells. In this study we found that the output synapses of bipolar cells also contribute to separate these pathways. Both transient and sustained ganglion cells can produce maintained spike activity, but bipolar cell glutamate release exhibits a divergence that corresponds to the response characteristics of the ganglion cells. Comparing light intensity coding in the sustained and transient ON pathways revealed that they shared the intensity spectrum. The transient pathway had greater sensitivity but smaller dynamic range, and switched from intensity coding to event detection at light levels where sustained pathway sensitivity began to rise. The distinctive properties of the sustained pathway depended upon inhibition and shifted toward those of the transient pathway in the absence of inhibition. The transient system was comparatively unaffected by the loss of inhibition and this was due to the concomitant activation of perisynaptic NMDA receptors. Overall, the properties of bipolar cell dendritic and axon terminals both contribute to the formation of key aspects of the sustained/transient dichotomy normally associated with ganglion cells.