During early mammalian development, inputs from the two retinas intermix within the lateral geniculate nucleus (LGN), then segregate during the first postnatal week into layers that receive input from a single retina. Functionally, the LGN also changes markedly during the first postnatal month; early geniculate responses to retinal input are mainly excitatory, then inhibitory circuits mature within the LGN. These remarkable changes in form and function of the retinogeniculate pathway occur at a time when patterned visual activity is not present, but retinal ganglion cells already manifest spontaneous action potential activity. To examine the role of early retinal activity in these critical developmental processes, we placed the slow release polymer Elvax embedded with tetrodotoxin (TTX) into the vitreous chamber of one or both eyes of neonatal ferrets. Animals receiving monocular injection of TTX had the other eye treated with Elvax containing control citrate buffer. Intraocular injection of horseradish peroxidase was made at the end of the period of TTX treatment to reveal the retinal terminals in the LGN. Chronic monocular or binocular blockade of retinal activity during the first postnatal week did not prevent eye-specific segregation, although it made the boundaries between layers less distinct. Retinal terminals ended preferentially in the appropriate layer, but a large number of terminals were also present in the inappropriate layer. Further segregation was achieved during the second postnatal week of activity blockade, when most retinal terminals ended preferentially in the appropriate geniculate layer and sharper layer boundaries were present. However, a small but significant number of terminals still extended into the inappropriate layer. Together, these findings indicate that monocular as well as binocular blockade of retinal activity resulted in some anomalous retinogeniculate projections and delayed eye-specific patterning, but segregation was largely intact at the end of the second postnatal week. We also report here that intraocular tetrodotoxin had a marked effect on the maturation of intrinsic geniculate circuits prior to eye opening. Whole-cell patch-clamp recordings in the LGN slice preparation revealed that activity blockade prevented the maturation of the slow, but not the fast, hyperpolarizing potential of LGN neurons during the first postnatal month and up to P38, the oldest age studied. In conclusion, these results indicate that spontaneous retinal activity modulates the time course of binocular segregation but does not alone account for the segregation of retinogeniculate terminals. However, early retinal activity plays an important role in developing the intrinsic circuitry of the LGN.