Two functionally and anatomically distinct types of lateral inhibition contribute to the receptive field organization of ganglion cells in the vertebrate retina: sustained lateral inhibition (SLI), which is present during steady illumination and transient lateral inhibition (TLI), evoked by changes in illumination. We studied adaptive changes in these two lateral inhibitory mechanisms in the mudpuppy retina by measuring the responses of ON-OFF ganglion cells to spots of light in the receptive field center, in the absence and presence of a concentric broken annulus (windmill) pattern, which was either stationary or rotating. SLI was measured as the percent suppression of the centered spot response by the stationary windmill and TLI was measured as the additional suppression produced when the windmill was rotating. In dark-adapted retinas SLI was elicited by windmills of 600 or 1,200 micron ID, but TLI could not be elicited by windmills of any size, over a wide range of windmill intensities and rotation rates. Exposure of dark-adapted retinas to diffuse adapting light caused an immediate decrease in the response to the spot alone, followed by slowly developing changes in both SLI and TLI: SLI produced by 1,200 micron ID windmills became weaker, whereas SLI produced by 600 micron ID windmills became stronger. After several minutes strong TLI could be elicited by both 600 and 1,200 micron ID windmills. The changes in SLI and TLI were usually complete within 5 and 15 min, respectively, and recovered to dark-adapted levels slightly more slowly after the adapting light was turned off. However the changes in sensitivity of the spot response were complete within one minute after onset and termination of the adapting light. The adaptive changes in SLI and TLI did not depend on the presence of the adapting light; after a brief (1 min) exposure to the adapting light, the changes in SLI and TLI slowly developed and then decayed back to the dark-adapted level. The effects of the adapting light on SLI were mimicked by dopamine and blocked by D1 dopamine receptor antagonists. However dopamine did not enable TLI in dark-adapted retinas and dopamine antagonists did not prevent enablement of TLI when dark-adapted retinas were exposed to light or disable TLI when applied to light-adapted retinas. The results suggest that light-adaptive changes in SLI are mediated by dopamine and are consistent with a reduction in electrical coupling between neurons that conduct the SLI signal laterally in the retina. In contrast, TLI appears to be switched off or suppressed in the dark-adapted retina and enabled in light-adapted retinas, by a relatively slow modulatory mechanism that does not involve dopamine.