The precise coordination of cell cycle exit and cell fate specification is essential for generating the correct proportion of retinal cell types during development. The decision to exit the cell cycle is regulated by intrinsic and extrinsic cues. There is growing evidence that neurotransmitters can regulate cell proliferation and cell fate specification during the early stages of CNS development prior to the formation of synaptic connections. We found that the excitatory neurotransmitter glutamate regulates retinal progenitor cell proliferation during embryonic development of the mouse. AMPA/kainate and N-methyl-D-aspartate receptors are expressed in embryonic retinal progenitor cells. Addition of exogenous glutamate leads to a dose-dependent decrease in cell proliferation without inducing cell death or activating the p53 pathway. Activation of AMPA/kainate receptors induced retinal progenitor cells to prematurely exit the cell cycle. Using a replication-incompetent retrovirus to follow the clonal expansion of individual retinal progenitor cells, it was observed that blockade of AMPA/kainate receptors increased the proportion of large clones, showing that modulation of endogenous glutamatergic activity can have long-term consequences on retinal cell proliferation. Real time reverse transcriptase-polymerase chain reaction and immunoblot analyses demonstrated that glutamate does not alter the levels of the mRNA and proteins that regulate the G1/S-phase transition. Instead, the activity of the Cdk2 kinase is reduced in the presence of glutamate. These data indicate that glutamate regulates retinal progenitor cell proliferation by post-translational modulation of cyclin/Cdk2 kinase activity.