To transmit information efficiently in a changing environment, the retina adapts to visual contrast by adjusting its gain, latency and mean response. Additionally, the temporal frequency selectivity, or bandwidth changes to encode the absolute intensity when the stimulus environment is noisy, and intensity differences when noise is low. We show that the On pathway of On-Off retinal amacrine and ganglion cells is required to change temporal bandwidth but not other adaptive properties. This remarkably specific adaptive mechanism arises from differential effects of contrast on the On and Off pathways. We analyzed a biophysical model fit only to a cells membrane potential, and verified pharmacologically that it accurately revealed the two pathways. We conclude that changes in bandwidth arise mostly from differences in synaptic threshold in the two pathways, rather than synaptic release dynamics as has previously been proposed to underlie contrast adaptation. Different efficient codes are selected by different thresholds in two independently adapting neural pathways.