Giant motion-sensitive tangential neurons in the lobula plate are thought to be cardinal elements in the oculomotor pathways of flies. However, these large neurons do not themselves compute motion, and elementary motion detectors have been proposed only from theory. Here we identify the forms, projections, and responses of small-field retinotopic neurons that comprise a well known pathway from the retina to the lobula plate. Already at the level of the second and third synapses beneath the photoreceptor layer, certain of these small elements show responses that distinguish motion from flicker. At a level equivalent to the vertebrate inner plexiform layer (the fly's outer medulla) at least one retinotopic element is directionally selective. At the inner medulla, small retinotopic neurons with bushy dendrites extending through a few neighboring columns leave the inner medulla and supply inputs onto lobula plate tangentials. These medulla relays have directionally selective responses that are indistinguishable from those of large-field tangentials except for their amplitude and modulation with contrast frequency. Centrifugal neurons leading back from the inner medulla out to the lamina also show orientation-selective responses to motion. The results suggest that specific cell types between the lamina and inner medulla correspond to stages of the Hassenstein-Reichardt correlation model of motion detection.