1. Intracellular recordings, sine wave gratings, and paired flashes were used to characterize the directional selectivity (DS) of the peripheral neurons of the crayfish visual pathway. DS was observed in nonspiking tangential (Tan1) neurons of the distal medulla externa and it is expressed by the amplitude of the modulated synaptic potential elicited with drifting gratings. 2. The directional mechanism was characterized by variations in the grating contrast, spatial frequency, and temporal frequency. DS is both contrast and velocity dependent. 3. The velocity dependence of DS for fixed stimulus contrast can be described by a linear model including a delay and subtractive compare operation. This mechanism operates over the entire useful range of spatial and temporal frequencies. 4. The parameters of the linear model can be estimated from the spatiotemporal structure of the Tan1 cell receptive field. The receptive field exhibits a spatially asymmetric inhibitory subfield that is offset from the excitatory subfield by 3-5 degrees (1-2 ommatidia). The inhibition is delayed relative to excitation by 50-100 ms. 5. The contrast dependence of DS reflects an apparent nonlinearity in the mechanism that determines the null response amplitude. The preferred response magnitude is approximately linear with variations in contrast. 6. The nonlinearity observed in the null direction can in principle be attributed to either a tonic excitation at 0 contrast or a threshold for inhibition. There is evidence for both processes in the Tan1 cell visual response.