GABAergic neurons have been identified in light and electron microscopic preparations of rat retina by an immunocytochemical localization of the GABA-synthesizing enzyme, glutamic acid decarboxylase (GAD). GAD-positive neuronal somata are found only in the inner and middle parts of the inner nuclear layer, and GAD-positive neuronal terminals are observed exclusively within the inner plexiform layer (IPL) and the outermost part of the ganglion cell layer. Dense aggregations of GAD-positive terminals alternate with less dense zones to form a lamination of the IPL. GAD-positive terminals contain pleomorphic synaptic vesicles and are the presynaptic elements of conventional synapses onto bipolar and amacrine cell processes, as well as onto the somata and dendrites of ganglion cells. In addition, GAD-positive terminals are postsynaptic to unstained bipolar terminals and are components of synaptic dyads where they occasionally appear to form reciprocal synapses with the bipolar terminals, and serial with unstained amacrine processes. Probable synaptic contacts between adjacent GAD-positive terminals also have been observed. Most of the synaptic input to GAD-positive terminals comes from bipolar cells, while the small remaining input mainly comes from other GAD-positive terminals. The synaptic output to GAD-positive terminals is greatest to bipolar cells, followed in decreasing order by GAD-negative amacrine cells, ganglion cells, and other GAD-positive cells. The total synaptic output of GAD-positive cells appears to be more than twice as great as the total input of these cells. The location of GAD-positive somata, the distribution of GAD-positive terminals, and the synaptic relationships formed by these terminals all indicate that amacrine cells are the only GABAergic neurons in rat retina. Our observations also indicate that not all amacrines are GABAergic and suggest that GABAergic neurons may be limited to a narrow field subclass of amacrine cell. The findings concerning the synaptic connections of GABAergic amacrines suggest that such cells are the first link in several divergent pathways from bipolar to ganglion cells and that they probably serve more than one function since they feed synaptic activity forward directly upon ganglion cells as well as back upon bipolar cells.