The mitral-granule cell (MC-GC) reciprocal synapse is an important source of auto- and lateral inhibition in the olfactory bulb (OB), and this local inhibition is critical for odor discrimination. We may gain insight into the role of MC autoinhibition in olfaction by correlating the functional development of the autoinhibition with the postnatal development of olfactory function. We have studied the functional development of the MC-GC reciprocal synapse using whole-cell patch-clamp recordings from MCs and GCs in acute olfactory bulb slices from 3- to 30-day old rats. The magnitude of dendrodendritic inhibition (DDI) measured by depolarizing a single MC and recording recurrent inhibition in the same cell increased up to the fifteenth day of life (P15), but dropped between P15 and P30. The initial increase and later decrease in DDI was echoed by a similar increase and decrease in the frequency of miniature inhibitory postsynaptic currents (mIPSCs), suggesting an accompanying modulation in the number of synapses available to participate in DDI. The late decrease in DDI could also result, in part, from a decrease in GC excitability as well as an increase in relative contribution of N-methyl D-aspartate (NMDA) receptors to gamma-amino butyric acid (GABA) release from GC synapses. Changes in release probability of GABAergic synapses are unlikely to account for the late reduction in DDI, although they might contribute to the early increase during development. Our results demonstrate that the functional MC-GC circuit evolves over development in a complex manner that may include both construction and elimination of synapses.