Synaptic transmission was examined in the plexiform zone of Octopus vulgaris optic lobes using field-potential recording from optic lobe slices. Stimulation of the optic nerve produced pre- and postsynaptic field potentials. Transmission was abolished in calcium-free seawater, L- glutamate or the AMPA/Kainate receptor blocker CNQX (EC50, 40 µm), leaving an intact presynaptic field potential. ACh markedly reduced or blocked and d-tubocurarine augmented both pre- and postsynaptic field potentials, while α-bungarotoxin and atropine were without effect. Paired-pulse stimulation showed short-term depression of pre- and postsynaptic components with a half-time of recovery of ∼ 500 ms. The depression was partially relieved in the presence of d-tubocurarine (half-time of recovery, 350 ms). No long-term changes in synaptic strength were induced by repetitive stimulation. A polyclonal antibody raised against a squid glutamate receptor produced positive staining in the third radial layer of the plexiform zone. No positive staining was observed in the other layers. Taking into account previous morphological data and our results, we propose that the excitatory terminations of the photoreceptors are in the innermost layer of the plexiform zone where the transmitter is likely to be glutamate and postsynaptic receptors are AMPA/kainate-like. Thus, the function of the terminal bags is to provide a location for a presynaptic cholinergic inhibitory shunt. The results imply that this arrangement provides a temporal filter for visual processing and enhances the perception of moving vs. stationary objects.