An ultrahigh resolution spectral domain optical coherence tomography (SD-OCT) system is used to observe for the first time in vivo the early effect of sodium iodate () toxicity on retinal morphology. Retinal degeneration is induced in rats via tail vein injection of and structural changes in the outer retina are assessed longitudinally at baseline and 1, 2, 3, 6, 8, and 10 h, and 12 post drug administration with OCT, H&E histology, and IgG immunochemistry. Disruption of the structural integrity and changes in the optical reflectivity of the photoreceptor inner (IS) and outer segment (OS) layers are observed as early as 1 h post injection. A new layer is observed in the OCT tomograms to form between the retinal pigmented epithelium and the photoreceptors OS a few hours post injection. The dynamics and the low optical reflectivity of this layer, as well as cell swelling and disruption of the blood-retina barrier observed in the histological and immunohistochemistry cross-sections suggest that the layer corresponds to temporary fluid accumulation in the retina. Results from this study demonstrate the effectiveness of OCT technology for monitoring dynamic changes in the retinal morphology and provide better understanding of the early stages of outer retina degeneration induced by toxicity.