Summary
How neural populations represent sensory information, and how that representation is transformed from one brain area to another, are fundamental questions of neuroscience. The dorsolateral geniculate nucleus (dLGN) and primary visual cortex (V1) represent two distinct stages of early visual processing. Classic sparse coding theories propose that V1 neurons represent local features of images. More recent theories have argued that the visual pathway transforms visual representations to become increasingly linearly separable. To test these ideas, we simultaneously recorded the spiking activity of mouse dLGN and V1 in vivo. We find strong evidence for both sparse coding and linear separability theories. Surprisingly, the correlations between neurons in V1 (but not dLGN) were shaped as to be irrelevant for stimulus decoding, a feature which we show enables linear separability. Therefore, our results suggest that the dLGN-V1 transformation reshapes correlated variability in a manner that facilitates linear decoding while producing a sparse code.