To examine the role of endogenous vasopressin on the electrical activity of vasopressin neurons within the supraoptic nucleus of the rat brain in vivo, we have developed a novel technical approach for administering neuroactive drugs directly into the extracellular environment of the neuronal dendrites. A microdialysis probe was used for controlled local drug administration into the dendritic area of the nucleus during extracellular recording of single neurons in vivo. Vasopressin or selective V1 receptor antagonists were administered for between 10 and 30 min via a U-shaped microdialysis probe placed flat on the surface of the supraoptic nucleus after transpharyngeal exposure of the nucleus in urethane-anaesthetized rats. Microdialysis administration (retrodialysis) of vasopressin inhibited vasopressin neurons by reducing their firing rate, sometimes to total inactivity. Retrodialysis of V1-receptor antagonists partially reversed the effect of vasopressin, and a subsequent vasopressin administration was not effective in reducing the activity of these neurons, suggesting a receptor-mediated action of endogenous vasopressin. In addition, the duration of the periods of activity and the mean frequency during the active phase were increased in vasopressin neurons after retrodialysis of V1-receptor antagonist, indicating a physiological role of endogenous vasopressin. Neither vasopressin nor the antagonists altered the activity of continuously firing oxytocin neurons. Thus, vasopressin released within the supraoptic nucleus may act via V1 receptors located specifically on vasopressin neurons to regulate their phasic activity by an auto-inhibitory action. Since vasopressin release from the dendrites of vasopressin neurons is increased and prolonged after various forms of stimulation, it is proposed that this mechanism will act to limit excitation of vasopressin neurons, and hence secretion from the neurohypophysis. In addition, combined in vivo retrodialysis/ single cell recording allows controlled introduction of neuroactive substances into the extracellular fluid in the immediate vicinity of recorded neurons. This is shown to provide a novel approach to study neurotransmitter actions on supraoptic neurons in vivo.