The center-surround receptive-field organization in retinal ganglion cells is widely believed to result mainly from lateral inhibition at the first synaptic level (in the outer retina). Inhibition at the second synaptic level (in the inner retina) is thought to mediate more complex response properties. Here we show that much of the sustained surround antagonism in certain on-center ganglion cells results from lateral inhibition in the inner retina, via GABAergic amacrine cells, and that the lateral conduction of this signal requires voltage-gated sodium currents. Blocking lateral inhibition in the inner retina eliminates the preference of small-center ganglion cells for small stimuli but has little effect on ganglion cells with large receptive-field centers. These results illustrate how lateral inhibition at successive synaptic stages can selectively control the size of neural receptive-field centers.