Glycinergic and GABAergic excitatory chloride-mediated signaling is often the first form of activity to emerge in the nascent nervous system and has been proposed to be essential for several aspects of nervous system development. However, few studies have examined the effects of disrupting glycinergic transmission. Here we perturbed glycinergic transmission in vivo from the onset of development in zebrafish and examined its impact on the formation of the locomotor circuitry. Targeted knockdown of the embryonic glycine receptor alpha2-subunit disrupted rhythm-generating networks and reduced the frequency of spontaneous glycinergic and glutamatergic events. Immunohistochemistry revealed a reduction in the number of spinal interneurons without affecting sensory and motor neurons. This effect was accompanied by a concomitant increase in the number of mitotic cells, suggesting that glycine receptors regulate interneuron differentiation during early development. Despite the loss of many interneurons, a subthreshold rhythm-generating circuit was still capable of forming. These data provide evidence that glycine receptors, in addition to their role in neurotransmission, regulate interneuron differentiation during development of this central neural network.