The retina extracts visual features for transmission to the brain. Different types of bipolar cell split the photoreceptor input into parallel channels and provide the excitatory drive for downstream visual circuits. Mouse bipolar cell types have been described at great anatomical and genetic detail, but a similarly deep understanding of their functional diversity is lacking. Here, by imaging light-driven glutamate release from more than 13,000 bipolar cell axon terminals in the intact retina, we show that bipolar cell functional diversity is generated by the interplay of dendritic excitatory inputs and axonal inhibitory inputs. The resulting centre and surround components of bipolar cell receptive fields interact to decorrelate bipolar cell output in the spatial and temporal domains. Our findings highlight the importance of inhibitory circuits in generating functionally diverse excitatory pathways and suggest that decorrelation of parallel visual pathways begins as early as the second synapse of the mouse visual system.