The neuropeptide somatostatin (SS) has been localized to neurons of the rabbit retina by immunochemical and biochemical methods (Sagar et al., 1982, 1986; Marshak and Yamada 1984). We examined the effects of bath- applied SS on neurons of the rabbit retina, using intra- and extracellular electrophysiological techniques in an in vitro retina eyecup preparation. All commonly encountered ganglion cell receptive field types were affected by SS, and the effects were of 3 kinds: The first was a general excitation, occurring with a threshold concentration of about 100 nM; the onset of the excitation was too slow (seconds) for SS to participate in any rapid light-evoked responses. The second SS effect was an increase in the “signal-to-noise ratio,” defined here as the ratio of light-evoked to spontaneous spiking, which resulted from a decrease in spontaneous activity and, usually, a concomitant increase in light-evoked spiking. The third effect was a shift in center-surround balance towards a more dominant center. The signal-to-noise and center-surround effects were evident at concentrations as low as 0.5 nM; both were slow onset (tens of seconds) and long lasting (tens of minutes). SS acted at multiple levels within the retinal circuitry to produce the observed changes in ganglion cell output. These effects included direct actions on ganglion and amacrine cells, and a decrease in the efficiency with which horizontal cells could drive the retinal network. At least part of these SS actions on third-order neurons resulted from a decrease in conductance to ions with an equilibrium potential more positive than dark membrane potential. The degradation-resistant SS agonist SMS201–995 had effects qualitatively and quantitatively similar to those of SS, suggesting that SS may be degraded slowly enough to act at a distance from its sites of release. While no adequate SS antagonist is available, the greater sensitivity to exogenous SS, in retinas depleted of their SS content (with cysteamine), suggests a role for endogenous SS. The potency of SS also reinforces this view. The results of this study suggest that SS may be a neuromodulator in the rabbit retina, producing long-lasting changes in the “signal-to-noise” discharge pattern and center-surround balance of ganglion cells.