Binocular vision is shaped by experience during a critical period of early postnatal life. Loss of visual acuity following monocular deprivation is mediated by a shift of spiking output from the primary visual cortex. Both synaptic and network explanations have been offered for this heightened brain plasticity. Direct experimental control over its timing, duration, and closure has now been achieved through a consideration of balanced local circuit excitation-inhibition. Notably, canonical models of homosynaptic plasticity at excitatory synapses alone (LTP/LTD) fail to produce predictable manipulations of the critical period in vivo. Instead, a late functional maturation of intracortical inhibition is the driving force, with one subtype in particular standing out. Parvalbumin-positive large basket cells that innervate target cell bodies with synapses containing the alpha1-subunit of GABA(A) receptors appear to be critical. With age, these cells are preferentially enwrapped in peri-neuronal nets of extracellular matrix molecules, whose disruption by chondroitinase treatment reactivates ocular dominance plasticity in adulthood. In fact, critical period plasticity is best viewed as a continuum of local circuit computations ending in structural consolidation of inputs. Monocular deprivation induces an increase of endogenous proteolytic (tPA-plasmin) activity and consequently motility of spines followed by their pruning, then re-growth. These early morphological events faithfully reflect competition only during the critical period and lie downstream of excitatory-inhibitory balance on a timescale (of days) consistent with the physiological loss of deprived-eye responses in vivo. Ultimately, thalamic afferents retract or expand accordingly to hardwire the rapid functional changes in connectivity. Competition detected by local inhibitory circuits then implemented at an extracellular locus by proteases represents a novel, cellular understanding of the critical period mechanism. It is hoped that this paradigm shift will lead to novel therapies and training strategies for rehabilitation, recovery from injury, and lifelong learning in adulthood.