1. The effects of the divalent cation Mg2+ on NMDA currents recorded from cultured fetal mouse and acutely isolated neonatal rat hippocampal neurones were studied using the whole-cell patch-clamp technique. 2. Current-voltage relations were measured in the presence or absence of applied Mg2+ and added glycine. NMDA-evoked currents were studied in the absence or in a low concentration (0.2 mM) of applied Ca2+ in order to minimize Ca(2+)-dependent inactivation of the responses. Mg2+ unexpectedly enhanced NMDA-activated currents at positive membrane potentials. At negative membrane potentials Mg2+ caused a previously characterized voltage-dependent block of inward NMDA-activated currents. 3. The potentiation by Mg2+ of outward currents activated by NMDA was concentration dependent (EC50, approximately 3 mM; Hill coefficient, approximately 2). Mg2+ also reduced the desensitization of the NMDA receptor. The maximal enhancement of steady-state NMDA-activated currents was 2.7-fold and at 6 mM the time constant of desensitization was doubled. 4. Comparisons of concentration-response curves for glycine and 7-chloro-kynurenic acid demonstrated that Mg2+ significantly increased the affinity of the NMDA receptor for glycine. The EC50 for glycine was 380 nM in the absence of Mg2+ and 163 nM in 3 mM Mg2+. Mg2+ had little effect on the forward rate of the glycine response but halved the off-rate (2.34 to 1.15 s-1) and thus similarly reduced the apparent dissociation constant. 5. There was a good correlation between the concentration of extracellular Ca2+ and a reduction in the time constant of the glycine-sensitive component of NMDA receptor desensitization. Ca2+ could enhance these NMDA-activated currents briefly following exposure to high concentrations of Ca2+. These results are consistent with a Ca(2+)-dependent enhancement of the affinity of the NMDA receptor for glycine. 6. Mg2+ can enhance NMDA-mediated currents and reduce desensitization of this receptor by allosterically interacting with the glycine binding site. This interaction may be a key physiological mechanism through which modulation of the NMDA receptor is achieved.