In the compound eye of Limulus, the activity of a single optic nerve fiber elicited by a spot of light on its ommatidium was inhibited by antidromic impulses in the remaining optic nerve fibers (antidromic inhibitory volleys) in a manner similar to the lateral inhibition of Hartline et al produced by illuminating nearby ommatidia. The after-discharge which was often observed in response to strong illumination was also inhibited by such antidromic inhibitory volleys. Thus the lateral inhibition was shown to be the result of impulses elicited in neighboring fibers whether they are orthodromic or antidromic. Another experiment in which an extracellular microelectrode was placed on a nerve fiber at a point close to its ommatidium is depolarized by illumination and repolarized by antidromic inhibitory volleys. Threshold of this region to electrical shocks was elevated during inhibition while lowered by subliminal illumination. The result suggested strongly that the inhibitory effect from neighboring fibers is exerted upon the impulse-generating mechanism in the ommatidium through cross-connections in the plexus lying behind the ommatidia.