How does a circuit of neurons process sensory information? And how are transformations of neural signals altered by changes in synaptic strength? We investigate these questions in the context of the visual system and the lateral line of fish. A distinguishing feature of our approach is the imaging of activity across populations of synapses – the fundamental elements of signal transfer within all brain circuits. A guiding hypothesis is that the plasticity of neurotransmission plays a major part in controlling the input-output relation of sensory circuits, regulating the tuning and sensitivity of neurons to allow adaptation or sensitization to particular features of the input. Sensory systems continuously adjust their input-output relation according to the recent history of the stimulus. A common alteration is a decrease in the gain of the response to a constant feature of the input, termed adaptation. For instance, in the retina, many of the ganglion cells (RGCs) providing the output produce their strongest responses just after the temporal contrast of the stimulus increases, but the response declines if this input is maintained. The advantage of adaptation is that it prevents saturation of the response to strong stimuli and allows for continued signaling of future increases in stimulus strength. But adaptation comes at a cost: a reduced sensitivity to a future decrease in stimulus strength. The retina compensates for this loss of information through an intriguing strategy: while some RGCs adapt following a strong stimulus, a second population gradually becomes sensitized. We found that the underlying circuit mechanisms involve two opposing forms of synaptic plasticity in bipolar cells: synaptic depression causes adaptation and facilitation causes sensitization. Facilitation is in turn caused by depression in inhibitory synapses providing negative feedback. These opposing forms of plasticity can cause simultaneous increases and decreases in contrast-sensitivity of different RGCs, which suggests a general framework for understanding the function of sensory circuits: plasticity of both excitatory and inhibitory synapses control dynamic changes in tuning and gain.