The major projection cells of the nucleus accumbens (NAc) are under a strong inhibitory influence from GABAergic afferents and depend on afferent excitation to produce their output. We have earlier reported that substance P (SP), a peptide which is colocalized with GABA in these neurons, depresses excitatory synaptic transmission in this nucleus (Kombian, S.B., Ananthalakshmi, K.V.V., Parvathy, S.S. & Matowe, W.C. (2003) J. Neurophysiol., 89, 728–738). In order to better understand the role of this peptide in the synaptic physiology of the NAc, it is important to determine its effects on inhibitory synaptic responses. Using whole-cell recording in rat forebrain slices, we show here that SP also depresses evoked inhibitory postsynaptic currents (IPSCs) in the NAc via intermediate neuromodulators. SP caused a partially reversible, dose-dependent decrease in evoked IPSC amplitude. This effect was present without measurable changes in the holding current, input resistance of recorded cells or decay rate (τ) of IPSCs. It was mimicked by a neurokinin-1 (NK1) receptor-selective agonist, [Sar9, Met (O2)11]-SP, and blocked by an NK1 receptor-selective antagonist, L 732 138. The SP-induced IPSC depression was prevented by SCH23390, a dopamine D1-like receptor antagonist and by 8-cyclopentyltheophylline, an adenosine A1 receptor blocker. Furthermore, the SP effect was also markedly attenuated by exogenous adenosine, dipyridamole, rolipram and barium. These data show that SP, acting on NK1 receptors, depresses inhibitory synaptic transmission indirectly by enhancing extracellular dopamine and adenosine levels. SP therefore acts in the NAc to modulate both excitatory and inhibitory afferent inputs using the same mechanism(s).