AII amacrine cells form a network of electrically coupled interneurons in the mammalian retina and tracer coupling studies suggest that the junctional conductance (G_j) can be modulated. However, the dynamic range of G_j and the functional consequences of varying G_j over the dynamic range are unknown. Here we use whole-cell recordings from pairs of coupled AII amacrine cells in rat retinal slices to provide direct evidence for physiological modulation of G_j, appearing as a a time-dependent increase from ~500 pS to a maximum of ~3000 pS after 30-90 minutes of recording. The increase occurred in recordings with low-resistance, but not high-resistance pipettes, suggesting that it was related to intracellular washout and perturbation of a modulatory system. Computer simulations of a network of electrically coupled cells verified that our recordings were able to detect and quantify changes in G_j over a large range. Dynamic clamp electrophysiology, with insertion of electrical synapses between AII amacrine cells, allowed us to finely and reversibly control G_j within the same range observed for physiologically coupled cells and to examine the quantitative relationship between G_j and steady-state coupling coefficient, synchronization of subthreshold membrane potential fluctuations, synchronization and transmission of action potentials, and low-pass filter characteristics. The range of G_j values over which signal transmission was modulated depended strongly on the specific functional parameter examined, with the largest range observed for action potential transmission and synchronization, suggesting that the full range of G_j values observed during spontaneous run-up of coupling could represent a physiologically relevant dynamic range.