Neurosteroids are produced de novo in neuronal and glial cells, which begin to express steroidogenic enzymes early in development. Studies suggest that neurosteroids may play important roles in neuronal circuit maturation via autocrine and/or paracrine actions. However, the mechanism of action of these agents is not fully understood. We report here that the excitatory neurosteroid pregnenolone sulfate induces a long-lasting strengthening of AMPA receptor-mediated synaptic transmission in rat hippocampal neurons during a restricted developmental period. Using the acute hippocampal slice preparation and patch-clamp electrophysiological techniques, we found that pregnenolone sulfate increases the frequency of AMPA-mediated miniature excitatory postsynaptic currents in CA1 pyramidal neurons. This effect could not be observed in slices from rats older than postnatal day 5. The mechanism of action of pregnenolone sulfate involved a short-term increase in the probability of glutamate release, and this effect is likely mediated by presynaptic NMDA receptors containing the NR2D subunit, which is transiently expressed in the hippocampus. The increase in glutamate release triggered a long-term enhancement of AMPA receptor function that requires activation of postsynaptic NMDA receptors containing NR2B subunits. Importantly, synaptic strengthening could also be triggered by postsynaptic neuron depolarization, and an anti-pregnenolone sulfate antibody scavenger blocked this effect. This finding indicates that a pregnenolone sulfate-like neurosteroid is a previously unrecognized retrograde messenger that is released in an activity-dependent manner during development.