In the retina, light onset hyperpolarizes photoreceptors and depolarizes ON bipolar cells at the sign inverting photoreceptor-ON bipolar cell synapse. Transmission at this synapse is mediated by a signaling cascade comprised of mGluR6, a G-protein containing G(αo), and the cation channel TRP melastatin 1 (TRPM1). This system is thought to be common to both the rod- and ON-cone-driven pathways, which control vision under scotopic and photopic conditions, respectively. In this study, we present evidence that the rod pathway is uniquely susceptible to modulation by PKCα at the rod-rod bipolar cell synapse. Decreased production of DAG (an activator of PKC) by inhibition of PIP₂ (phosphatidylinositol-4,5-bisphosphate) hydrolysis caused depression of the TRPM1 current. Conversely, addition of a DAG analog, 2-acetyl-1-oleoyl-sn-glycerol (OAG), potentiated the current in rod bipolar cells but not in ON-cone bipolar cells. The potentiating effects of OAG were absent both in mutant mice that lack PKCα expression and in wild-type mice in which enzymatic activity of PKCα was pharmacologically inhibited. In addition, we found that, like other members of the TRPM subfamily, TRPM1 current is susceptible to voltage-independent inhibition by intracellular magnesium, and that modulation by PKCα relieves this inhibition, as the potentiating effects of OAG are absent in low intracellular magnesium. We conclude that activation of PKCα initiates a modulatory mechanism at the rod-rod bipolar cell synapse whose function is to reduce inhibition of the TRPM1 current by magnesium, thereby increasing the gain of transmission at this synapse.