Most retinal amacrine (ACs) and ganglion cells (GCs) express temporal contrast by generating action potentials at only the onset and offset of the light stimulus. This study investigated the neural mechanisms that underlie this temporal contrast enhancement. Whole cell patch recordings were made from bipolar cells (BCs), ACs, and GCs in the retinal slice preparation. The cells were identified by the locations of their somas in the inner nuclear layer and ganglion cell layers, their characteristic light responses, and morphology revealed by Lucifer yellow staining. Depolarizing a single BC with a brief voltage pulse elicited a Cl- tail current that was completely abolished when Ca2+ entry to bipolar terminals was prevented, by either removing Ca2+ from the Ringer solution or blocking Ca2+ channels with Co2+. This suggests that the Cl- current is Ca2+-dependent. In those bipolar cells whose axon terminals were cutoff during slicing no Cl- current was observed, indicating that this current is generated at the synaptic terminals. The Cl- current consists of a predominant synaptic component that can be blocked by the non-N-methyl--aspartate (NMDA) glutamate receptor antagonist 6-cyano-7-nitroquinoxaline-2,3-dione (CNQX) or by the gamma-aminobutyric acid-C (GABAC) receptor antagonist picrotoxin. There also exists a relatively small nonsynaptic component. Thus both glutamatergic and GABAergic transmission were involved in the generation of this Cl- current, suggesting that it is mediated by a recurrent feedback to bipolar cells. Picrotoxin, which blocks both GABAC receptors at BC terminals and GABAA receptors on the dendrites of ACs and GCs, converted the light-elicited voltage response in most - ACs and GCs from transient to sustained. Bicuculline, which blocks only the GABAA receptors, did not prolong the transient response in - ACs and GCs. This suggests that a negative feedback mediated by the GABAC receptor on the bipolar terminals is responsible for making these responses transient. After the GABAergic feedback was blocked with picrotoxin the light-elicited voltage responses (recorded under current clamp) were more sustained than the current responses (recorded under voltage clamp) to the same light stimuli. This suggests that a voltage-dependent conductance converts the relatively transient current responses to more sustained voltage responses. Our results imply a synaptically driven local GABAergic feedback at bipolar terminals, mediated by GABAC receptors. This feedback appears to be a significant component of the mechanism underlying temporal contrast enhancement in - ACs and GCs.