The sensation of pain is carried to the central nervous system by small-diameter fibres which terminate in the superficial layers of the spinal grey matter, particularly the substantia gelatinosa. Opiate drugs administered into the substantia gelatinosa inhibit the excitation of deeper dorsal horn neurones by noxious peripheral stimuli while sparing the responses to other sensations such as touch. It has been suggested that opiates impair the release of the transmitter from the small-diameter nociceptive fibres, but it is also possible that opiates directly depress the responses of cells in the substantia gelatinosa which serve as interneurones in the pain pathway. We have made intracellular recordings from substantia gelatinosa neurones in a slice of rat spinal cord, and report here that morphine and enkephalin directly hyperpolarize substantia gelatinosa cells by opening membrane K+ channels. This inhibitory action of exogenous morphine provides a likely cellular mechanism for its analgesic properties. Moreover, enkephalin is an endogenous constituent of some cells of the substantia gelatinosa, where it is concentrated within terminals making synaptic contacts with other cell bodies and dendrites. The present findings thus strongly suggest that enkephalin serves as an inhibitory neurotransmitter within the substantia gelatinosa.