d-serine has been proposed as an endogenous modulator of N-methyl-d-aspartate (NMDA) receptors in many brain regions, but its presence and function in the vertebrate retina have not been characterized. We have detected d-serine and its synthesizing enzyme, serine racemase, in the retinas of several vertebrate species, including salamanders, rats, and mice and have localized both constituents to Müller cells and astrocytes, the two major glial cell types in the retina. Physiological studies in rats and salamanders demonstrated that, in retinal ganglion cells, d-serine can enhance excitatory currents elicited by the application of NMDA, as well as the NMDA receptor component of light-evoked synaptic responses. Application of d-amino acid oxidase, which degrades d-serine, reduced the magnitude of NMDA receptor-mediated currents, raising the possibility that endogenous d-serine serves as a ligand for setting the sensitivity of NMDA receptors under physiological conditions. These observations raise exciting new questions about the role of glial cells in regulating the excitability of neurons through release of d-serine.