To investigate the role(s) of protein-tyrosine sulfation in the retina, we examined retinal function and structure in mice lacking tyrosylprotein sulfotransferases (TPST) 1 and 2. Tpst double knockout (DKO; Tpst1−/−/Tpst2 −/−) retinas had drastically reduced electroretinographic responses, although their photoreceptors exhibited normal responses in single cell recordings. These retinas appeared normal histologically; however, the rod photoreceptors had ultrastructurally abnormal outer segments, with membrane evulsions into the extracellular space, irregular disc membrane spacing and expanded intradiscal space. Photoreceptor synaptic terminals were disorganized in Tpst DKO retinas, but established ultrastructurally normal synapses, as did bipolar and amacrine cells; however, the morphology and organization of neuronal processes in the inner retina were abnormal. These results indicate that protein-tyrosine sulfation is essential for proper outer segment morphogenesis and synaptic function, but is not critical for overall retinal structure or synapse formation, and may serve broader functions in neuronal development and maintenance.