1. To study the effects of glial cells on synapse formation, we established microcultures of purified rat retinal ganglion cells (RGCs) and monitored synapse (autapse) development in single neurones using electrophysiological recordings, FM1-43 labelling and immunocytochemistry. 2. Solitary neurones grew ramifying neurites, but formed only very few and inefficient excitatory autapses, when cultured for up to 2 weeks in defined medium and in the absence of glial cells. 3. Treatment of glia-free microcultures of RGCs with glia-conditioned medium (GCM) increased the number of autapses per neurone by up to 10-fold. This was indicated by a similar increase in the frequency of spontaneous events and the number of FM1-43-labelled functional release sites and of puncta, where pre- and postsynaptic markers colocalized. 4. In addition, GCM treatment enhanced the efficacy of presynaptic transmitter release as indicated by lower failure rates of stimulation-induced excitatory autaptic currents, a 200-fold increase in the frequency of asynchronous release and an accelerated stimulation-induced FM1-43 destaining. Furthermore, GCM induced an increase in the quantal size. 5. GCM affected autaptic activity not immediately, but with a delay of 24 h, and the effects on stimulation-induced autaptic currents occurred before changes in the frequency of spontaneous events indicating an early strengthening of existing autapses followed by a later increase in autapse number. 6. The observed effects were mediated by proteinase K-sensitive factors in GCM and occurred independently of electrical activity. 7. These results suggest that soluble glia-derived signals induce synapse formation and maturation in neurones of the central nervous system (CNS).