The visual system is highly sensitive to dynamic features in the visual scene. However, it is not known how or where this enhanced sensitivity first occurs. We investigated this phenomenon by studying interactions between excitatory and inhibitory synapses in the second synaptic layer of the mouse retina. We found that these interactions showed activity-dependent changes that enhanced signaling of dynamic stimuli. Excitatory signaling from cone bipolar cells to ganglion cells exhibited strong synaptic depression, attributable to reduced glutamate release from bipolar cells. This depression was relieved by amacrine cell inhibitory feedback that activated presynaptic GABAC receptors. We found that the balance between excitation and feedback inhibition depended on stimulus frequency; at short interstimulus intervals, excitation was enhanced, attributable to reduced inhibitory feedback. This dynamic interplay may enrich visual processing by enhancing retinal responses to closely spaced temporal events, representing rapid changes in the visual environment.