The emergence of functional lateral interactions in ferret visual cortex was monitored using high speed optical imaging of voltage-sensitive dye signals in brain slices. Prior to the time of eye opening, lateral activation was restricted to a narrow columnar region. During the week following eye opening, the extent of lateral propagation of activity more than doubled. Selective interruption of specific pathways in the slice, combined with pharmacological and anatomical experiments, determined that this lateral propagation was mediated by horizontal projections made within layer 2/3. These results indicate that functional horizontal interactions emerge only after axons begin branching and in parallel with, but not prior to, the refinement of orientation selectivity.