Ciliary neurotrophic factor (CNTF) promotes photoreceptor survival but also suppresses electroretinogram (ERG) responses. This has caused concerns about whether CNTF is detrimental to the function of photoreceptors because it is considered to be a potential treatment for retinal degenerative disorders. Here we report that the suppression of ERG responses is attributable to negative regulation of the phototransduction machinery in rod photoreceptors. Intravitreal injection of recombinant human CNTF protein in rat results in a series of biochemical and morphological changes in rod photoreceptors. CNTF induces a decrease in rhodopsin expression and an increase in arrestin level. Morphologically, CNTF treatment causes a shortening of rod outer segments (ROS). All of these changes are fully reversible. The lower rhodopsin level and shortened ROS reduce the photon catch of rods. Less rhodopsin and more arrestin dramatically increase the arrestin-to-rhodopsin ratio so that more arrestin molecules are available to quench the photoexcited rhodopsin. The overall effect of CNTF is to negatively regulate the phototransduction machinery, which reduces the photoresponsiveness of rods, resulting in lower ERG amplitude at a given intensity of light stimulus. The CNTF-induced changes in rods are similar to those in light-induced photoreceptor plasticity. Whether CNTF-induced changes in rods are through the same mechanism that mediates light-induced photoreceptor plasticity remains to be answered.