The visual responses of vertebrates are sensitive to the overall composition of retinal interneurons including amacrine cells, which tune the activity of the retinal circuitry. The expression of is regulated by multiple cis-DNA elements including the intronic α-enhancer, which is active in GABAergic amacrine cell subsets. Here, we report that the transforming growth factor ß1-induced transcript 1 protein (Tgfb1i1) interacts with the LIM domain transcription factors Lhx3 and Isl1 to inhibit the α-enhancer in the post-natal mouse retina. mice show elevated α-enhancer activity leading to overproduction of Pax6ΔPD isoform that supports the GABAergic amacrine cell fate maintenance. Consequently, the mouse retinas show a sustained light response, which becomes more transient in mice with the auto-stimulation-defective mutation. Together, we show the antagonistic regulation of the α-enhancer activity by Pax6 and the LIM protein complex is necessary for the establishment of an inner retinal circuitry, which controls visual adaptation.