Key points This study provides experimental evidence that glycinergic interplexiform cells create a centrifugal feedback loop in the vertebrate retina that regulates the transmission of glutamatergic signals between photoreceptors and second‐order neurons. This mechanism serves to reduce glutamate uptake and enhance glutamate release. Glycine receptors containing the GlyRα3 subunit are expressed on bipolar cell dendrites, and their activation leads to a depolarizing response in a group of rod‐dominated ON bipolar cells, and hyperpolarizing responses in OFF bipolar cells. Using strychnine to block endogenous glycine feedback reduces the amplitudes of light‐evoked responses in both ON and OFF bipolar cells, indicating that glycine feedback regulates signal propagation in the distal retina. Glycinergic feedback provides a neural mechanism that enhances synaptic gain and improves visual sensitivity. Abstract Glycine input originates with interplexiform cells, a group of neurons situated within the inner retina that transmit signals centrifugally to the distal retina. The effect on visual function of this novel mechanism is largely unknown. Using gramicidin‐perforated patch whole cell recordings, intracellular recordings and specific antibody labelling techniques, we examined the effects of the synaptic connections between glycinergic interplexiform cells, photoreceptors and bipolar cells. To confirm that interplexiform cells make centrifugal feedback on bipolar cell dendrites, we recorded the postsynaptic glycine currents from axon‐detached bipolar cells while stimulating presynaptic interplexiform cells. The results show that glycinergic interplexiform cells activate bipolar cell dendrites that express the α3 subunit of the glycine receptor, as well as a subclass of unidentified receptors on photoreceptors. By virtue of their synaptic contacts, glycine centrifugal feedback increases glutamate release from photoreceptors and suppresses the uptake of glutamate by the type 2A excitatory amino acid transporter on photoreceptors. The net effect is a significant increase in synaptic gain between photoreceptors and their second‐order neurons.