Previous studies have shown that application of nicotinic agonists in the substantia nigra pars compacta increases the firing rate of dopaminergic neurons. We have used intracellular recordings to show that the response of these neurons to nicotine is postsynaptic, since it persists in the presence of low-calcium buffer containing tetrodotoxin. Burst firing in the presence of nicotine was not observed. The presence of postsynaptic nicotinic receptors was confirmed by immunohistochemical localization of the alpha4 nicotinic receptor subunit on dendrites in the substantia nigra pars compacta. The majority of tyrosine hydroxylase-immunopositive neurons in the substantia nigra pars compacta were also immunopositive for the alpha4 subunit. Immunohistochemical localization of the alpha4 and beta2 subunits in adjacent brain sections produced similar patterns of staining. Electron micrographs clearly indicated the presence of alpha4 subunit at postsynaptic densities. The predominant role of nicotinic receptors in the central nervous system has been suggested to be the presynaptic modulation of neurotransmitter release [McGehee D. S. and Role L. W. (1995) A. Rev. Physiol. 57, 521-546]. Although several postsynaptic nicotinic responses have also been reported in the literature, it is unclear as to whether the postsynaptic nicotinic receptors mediating responses to exogenously applied agonists are involved in synaptic transmission. From our electrophysiological and immunohistochemical results, we conclude that alpha4-containing nicotinic receptors are found at synapses on dopaminergic neurons. These synapses are similar to the cholinergic synapses described at these neurons, suggesting that nicotinic receptors are important in modulating the excitability of dopaminergic neurons by direct synaptic transmission.