As a part of the retina, the bipolar cell exists between photoreceptors (rod cells and cone cells) and ganglion cells. They act to, directly or indirectly, transmit signals from the photoreceptors to the ganglion cells.
Cone bipolar cells can be categorized into two different groups, ON and OFF, based on how they react to glutamate released by photoreceptor cells. When light hits a photoreceptor cell, the photoreceptor hyperpolarizes, and releases less glutamate. An ON bipolar cell will react to this change by depolarizing. An OFF bipolar cell will react to this change by hyperpolarizing.
Under dark conditions a photoreceptor cell will release glutamate, which inhibits the ON bipolar cell. In light, however, light strikes the photoreceptor which causes it to be inhibited, and thus no glutamate to be given off. In this scenario, the bipolar is activated. In an OFF bipolar cell, light strikes a photoreceptor causing it to be inhibited and thus the bipolar cell will be inhibited as well. In darkness, the photoreceptor cell will be excited by darkness, give off glutamate, and will in effect excite the OFF bipolar cell. OFF bipolar cells are sign-conserving(+ and +, - and -) whereas ON bipolar cells are sign-inverting (+ and -, - and +).
However rod bipolar cells are neither ON or OFF, but through the AII amacrine cell can selectively excite cone ON bipolar cells (via gap junctions) and inhibit cone OFF bipolar cells (via Gly inhibitory synapses.)
OFF bipolar cells synapse in the outer layer of the inner plexiform layer of the retina, and ON bipolar cells terminate in the inner layer of the inner plexiform layer.
The mechanism for producing the center of a bipolar cell's receptive field is well known: direct innervation of the photoreceptor above it, either through a metabotropic (ON) or ionotropic (OFF) receptor. However, the mechanism for producing the monochromatic surround of the same receptive field is under investigation. While it is known that an important cell in the process is the horizontal cell, the exact sequence of receptors and molecules is as of yet unknown.