GABA and glycine provide excitatory action during early development: they depolarize neurons and increase intracellular calcium concentration. As neurons mature, GABA and glycine become inhibitory. This switch from excitation to inhibition is thought to result from a shift of intracellular chloride concentration ([Cl^-]_i) from high to low, but in retina, measurements of [Cl^-]_i or chloride equilibrium potential (E_Cl) during development have not been made. Using the developing mouse retina, we systematically measured [Cl^-]_i in parallel with GABA's actions on calcium and chloride. In ganglion and amacrine cells, fura-2 imaging showed that before postnatal day (P) 6, exogenous GABA, acting via ionotropic GABA receptors, evoked calcium rise, which persisted in HCO₃^--free buffer, but was blocked with 0 extracellular calcium. After P6, GABA switched to inhibiting spontaneous calcium transients. Concomitant with this switch we observed the following: (1) MEQ chloride imaging showed that GABA caused an efflux of chloride before P6 and an influx afterwards; (2) gramicidin-perforated patch recordings showed that the reversal potential for GABA decreased from -45 mV, near threshold for voltage-activated calcium channel, to -60 mV, near resting potential; (3) MEQ imaging showed that [Cl^-]_i shifted steeply around P6 from 29 mM to 14 mM, corresponding to a decline of E_Cl from -39 mV to -58 mV. We also show that GABAergic amacrine cells became stratified by P4, potentially allowing the excitatory action of GABA to shape circuit connectivity. Our results support the hypothesis that a shift from high [Cl^-]_i to low causes GABA to switch from excitatory to inhibitory.