The visual system of the fly's compound eye undergoes a number of cyclical day/night changes that have a circadian basis. Such responses are seen in the synaptic terminals of the photoreceptors and in their large monopolar-cell interneurons in the first optic neuropile, or lamina. These changes include, in the photoreceptor terminals, rhythms in the numbers of synapses and the vertical migration of screening pigment; and, in the monopolar cells L1 and L2, a rhythm in the transients of the electroretinogram and in the cyclical swelling of L1 and L2 lamina axons, as well as of the epithelial glia that surround these. Some of these changes are seen in both the housefly and the fruit fly, but the time-course of such changes differs between the two species. Many of the changes are influenced by the injection of various transmitter candidates, in a direction that can be reconciled with the possibility of normal endogenous release of two substances, 5HT from the neurites of 5HT-immunoreactive neurons, and pigment dispersing factor peptide from the neurites of PDH cells. Consistent with this interpretation, the immunoreactive varicosities of PDH cells exhibit size changes attributable to their cyclical release of peptide, or to its cyclical synthesis and/or transport from the PDH cell somata. Thus, neurotransmitter substances not only have rapid electrophysiological actions in the optic lobe, but also longer-lasting, presumably indirect, neuromodulatory actions, which are manifest as structural changes among the lamina's neurons and synapses. These actions involve an interplay between aminergic and peptidergic systems, but the exact role and especially the site of action of each has still to be elucidated.