GABA and glycine provide excitatory action during early development: they depolarize neurons and increase intracellular calcium concentration. As neurons mature, GABA and glycine become inhibitory. This switch from excitation to inhibition is thought to result from a shift of intracellular chloride concentration ([Cl-]i) from high to low, but in retina, measurements of [Cl-]i or chloride equilibrium potential (ECl) during development have not been made. Using the developing mouse retina, we systematically measured [Cl-]i in parallel with GABA's actions on calcium and chloride. In ganglion and amacrine cells, fura-2 imaging showed that before postnatal day (P) 6, exogenous GABA, acting via ionotropic GABA receptors, evoked calcium rise, which persisted in HCO3- -free buffer but was blocked with 0 extracellular calcium. After P6, GABA switched to inhibiting spontaneous calcium transients. Concomitant with this switch we observed the following: 6-methoxy-N-ethylquinolinium iodide (MEQ) chloride imaging showed that GABA caused an efflux of chloride before P6 and an influx afterward; gramicidin-perforated-patch recordings showed that the reversal potential for GABA decreased from -45 mV, near threshold for voltage-activated calcium channel, to -60 mV, near resting potential; MEQ imaging showed that [Cl-]i shifted steeply around P6 from 29 to 14 mM, corresponding to a decline of ECl from -39 to -58 mV. We also show that GABAergic amacrine cells became stratified by P4, potentially allowing GABA's excitatory action to shape circuit connectivity. Our results support the hypothesis that a shift from high [Cl-]i to low causes GABA to switch from excitatory to inhibitory.