The role of transferrin as a possible neurotransmitter was examined in cultured chick retinal cells. Brief exposure to transferrin caused a dramatic and transient increase in intracellular calcium levels in approximately 20% of the total population of cultured retinal neurons. The increase in intracellular calcium was observed in cell bodies and neuronal processes. Electrophysiological analysis of a subset of the population, bipolar-like neurons, demonstrated that more than half of these cells responded to the application of transferrin with a transient membrane depolarization. Under voltage clamp conditions, the currents evoked by transferrin were similar to glutamate in that they both displayed non-linear voltage dependence. Furthermore, acute transferrin exposure resulted in a 200% increase in the amount of Na+ independent [3H]glutamate binding observed in these cultures. These results suggest that transferrin may function as a neurotransmitter or neuromodulator in the developing vertebrate nervous system.