Although originally cloned from rat brain, the P2X7 receptor has only recently been localized in neurones, and functional responses mediated by these neuronal P2X7 receptors (P2X7R) are largely unknown. Here we studied the effect of P2X7R activation on the release of neurotransmitters from superfused rat hippocampal slices. ATP (1–30 mm) and other ATP analogues elicited concentration-dependent [3H]GABA outflow, with the following rank order of potency: benzoylbenzoylATP (BzATP) > ATP > ADP. PPADS, the non-selective P2-receptor antagonist (3–30 µm), Brilliant blue G (1–100 nm) the P2X7-selective antagonist and Zn2+ (0.1–30 µm) inhibited, whereas lack of Mg2+ potentiated the response by ATP. In situ hybridization revealed that P2X7R mRNA is expressed in the neurones of the cell body layers in the hippocampus. P2X7R immunoreactivity was found in excitatory synaptic terminals in CA1 and CA3 region targeting the dendrites of pyramidal cells and parvalbumin labelled structures. ATP (3–30 µm) and BzATP (0.6–6 µm) elicited concentration-dependent [14C]glutamate efflux, and blockade of the kainate receptor-mediated transmission by CNQX (10–100 µm) and gadolinium (100 µm), decreased ATP evoked [3H]GABA efflux. The Na+ channel blocker TTX (1 µm), low temperature (12°C), and the GABA uptake blocker nipecotic acid (1 mm) prevented ATP-induced [3H]GABA efflux. Brilliant blue G and PPADS also reduced electrical field stimulation-induced [3H]GABA efflux. In conclusion, P2X7Rs are localized to the excitatory terminals in the hippocampus, and their activation regulates the release of glutamate and GABA from themselves and from their target cells.