Purpose. The purposes of this study were to investigate the physiological mechanism of stimulus-evoked fast intrinsic optical signals (IOSs) recorded in dynamic confocal imaging of the retina, and to demonstrate the feasibility of in vivo confocal IOS mapping of localized retinal dysfunctions. Methods. A rapid line-scan confocal ophthalmoscope was constructed to achieve in vivo confocal IOS imaging of frog (Rana pipiens) retinas at cellular resolution. In order to investigate the physiological mechanism of confocal IOS, comparative IOS and electroretinography (ERG) measurements were made using normal frog eyes activated by variableintensity stimuli. A dynamic spatiotemporal filtering algorithm was developed to reject the contamination of hemodynamic changes on fast IOS recording. Laser-injured frog eyes were employed to test the potential of confocal IOS mapping of localized retinal dysfunctions. Results. Comparative IOS and ERG experiments revealed a close correlation between the confocal IOS and retinal ERG, particularly the ERG a-wave, which has been widely used to evaluate photoreceptor function. IOS imaging of laser-injured frog eyes indicated that the confocal IOS could unambiguously detect localized (30 μm) functional lesions in the retina before a morphological abnormality is detectable. Conclusions. The confocal IOS predominantly results from retinal photoreceptors, and can be used to map localized photoreceptor lesion in laser-injured frog eyes. We anticipate that confocal IOS imaging can provide applications in early detection of age-related macular degeneration, retinitis pigmentosa, and other retinal diseases that can cause pathological changes in the photoreceptors. © 2012 The Association for Research in Vision and Ophthalmology, Inc.