Pituitary adenylate cyclase activating polypeptide (PACAP) and its high affinity receptor PAC1 are expressed in mammalian retina and involved in processing light information. However, their roles during retinogenesis remain largely elusive. Previously, we have generated transgenic mice overexpressing the human PAC1 receptor, and shown that PACAP signaling is essential for normal development of the central nervous system. In this study, we show for the first time that PACAP signaling plays an important role in the development of retina, particularly in the genesis of GABAergic amacrine cells. Overexpression of the PAC1 receptor leads to an early exit from retinal proliferation, reduced production of GABAergic neurons, and a marked decline in visual function. These data demonstrate that an appropriate level of PACAP signaling is required for normal retinogenesis and visual function. This finding may have implications in GABAergic neuron-related neurological conditions. © 2009 Elsevier Ltd. All rights reserved.