Using optical recording techniques, we directly monitored pre- and postsynaptic calcium dynamics at bipolar cell terminals while inhibiting synaptic release with applied GABA and modulating inhibition with dopamine. To monitor pre-synaptic activity, individual bipolar cells in the retinal slice were filled with either fura-2 or fluo-3 through a patch electrode. Calcium entry into bipolar terminals, elicited by depolarization from -60 mV to 0 mV, was reduced to 36% of control in the presence of 200 microM bath-applied GABA. Further addition of 100 microM dopamine to the bath relieved the GABAergic inhibition and nearly doubled the calcium entry. Yet dopamine alone had no apparent direct effect upon calcium entry. The relief from GABAergic inhibition could be reproduced with SKF-38393, a dopamine D1 receptor agonist, and with forskolin, an adenylyl cyclase activator, suggesting that dopamine acts through a cAMP second-messenger pathway. To monitor transmitter release from bipolar cells, slices were loaded with fura-2AM, a membrane permeable form of the dye. Puffs of 110 mM KCl at bipolar dendrites depolarized bipolar cells and elicited calcium signals that could be monitored both at bipolar terminals and in postsynaptic cells. Consistent with the results above, GABA inhibited calcium entry at bipolar terminals and also reduced transmitter release, measured as a decrease in calcium entry in amacrine and ganglion cells. The addition of dopamine relieved this inhibition and increased transmitter release. Our results show the spatiotemporal correlation between the GABAergic inhibition of calcium entry at bipolar terminals, the resulting reduction in postsynaptic activity, and the relief of this inhibition with dopamine.