Retinal neurons extend their dendritic fields to achieve a degree of dendritic overlap with homotypic neighbors that is cell-type specific. How these neurons regulate their dendritic growth is unclear. The dendritic field of a retinal horizontal cell varies inversely with horizontal cell density across different strains of mice, suggesting that proximity to neighboring cells regulates dendritic growth. To test this directly, we have employed the Cre-loxP conditional gene targeting strategy to achieve inactivation of Lim1 function in developing horizontal cells. Through this approach, Lim1 function was prevented within a subset of horizontal cells that in turn fail to migrate to the horizontal cell layer and differentiate normally. For those remaining horizontal cells with Lim1 intact (about half of the normal population in these mice), we show that they spread themselves out tangentially and differentiate a dendritic morphology that is essentially normal but for the fact that it has nearly doubled in area. Such larger horizontal cells, sampling from an area of retina containing twice their normal afferent number, differentiate a dendritic field with nearly double the number of higher order branches and terminal clusters. These results demonstrate directly that positioning and dendritic growth are regulated by interactions with homotypic neighbors, whereas afferents instruct the differentiation of dendritic patterning.