Lengthy uninterrupted series of sections of the neural plexus in the compound eye of the horseshoe crab, Limulus polyphemus, have been used to reconstruct all the arborizations and their synaptic interconnections in a neuropil knot. This one microglomerulus contains the axons of 19 retinular cells, which pass by without contacts; 13 efferent fibres with 44 synapses to and from eccentric cell collaterals; and arborizations from 54 eccentric cells with 577 synapses. Eccentric cell axons are devoid of synaptic input. Their collaterals ramify in synaptic knots and subserve both pre- and postsynaptic functions simultaneously. Arborizations near the axon of origin have a highly branched pattern (up to 20 bifurcations), a high synaptic input: output ratio (up to about 9:1), and high synaptic density (a maximum of 12 per micrometre of neurite length). The opposite extreme is represented by sparsely branched eccentric cell collaterals distant from their axons of origin with very little synaptic input and sparse output. Spatially graded lateral inhibition is the apparent outcome of a radially decreasing distribution of inhibitory synapses on the arborizations of eccentric cell collaterals combined with possible decremental signal transmission in the plexus. The synaptic analysis has a bearing on most physiological aspects of lateral inhibition that have been studied in the Limulus eye. Implied in the results is the suggestion that synapse formation is an intrinsic property of the presynaptic element, but that the connectivity is governed by the electrical activity of target neurons.