Following synaptic release, glutamate binds to pre- and postsynaptic receptors before it is rapidly cleared from the synaptic cleft by diffusion and taken up by high affinity glutamate transporters. While glutamate transporters in glial cells and postsynaptic neurons contribute significantly to reuptake, the functional role of presynaptic transporters is poorly understood. They could contribute to maintaining the presynaptic transmitter pool, clearance of glutamate or regulation of synaptic transmission by acting as a negative feedback signal on presynaptic release. While all excitatory amino acid transporters (EAAT1–5) are electrogenic, transport also generates a non-stoichiometrically coupled anion current. The transporters with the most prominent anion current have been proposed to be strong candidates for regulating presynaptic function and transmitter release. In retina, there is evidence for presynaptic glutamate transporters in photoreceptors and bipolar cells. We have used electrophysiological recording to examine the functional properties of a presynaptic glutamate transporter in rod bipolar cells and its role in regulating glutamatergic transmission. Release of glutamate activates the presynaptic transporter with a time course that suggests a perisynaptic localization. The transporter can also be activated by spillover of glutamate from neighboring rod bipolar cells. By recording from pairs of rod bipolar cells and AII amacrine cells, we demonstrated that activation of the associated anion current hyperpolarizes or shunts the presynaptic terminal and thereby inhibits synaptic transmission by suppressing transmitter release. Given the evidence for presynaptic glutamate transporters, similar mechanisms could be of general importance for transmission in the CNS.