1. Nerve terminals of the rat posterior pituitary were acutely dissociated and identified using a combination of morphological and immunohistochemical techniques. Terminal membrane currents were studied using the 'whole-cell' patch clamp technique and channels were studied using inside-out and outside-out patches. 2. In physiological solutions, but with 7 mM 4-aminopyridine (4-AP), depolarizing voltage clamp steps from different holding potentials (-90 or -50 mV) elicited a fast, inward current followed by a slow, sustained, outward current. This outward current did not appear to show any steady-state inactivation. 3. The threshold for activation of the outward current was -30 mV and the current-voltage relation was 'bell-shaped'. The amplitude increased with increasingly depolarized potential steps. The outward current reversal potential was measured using tail current analysis and was consistent with that of a potassium current. 4. The sustained potassium current was determined to be dependent on the concentration of intracellular calcium. Extracellular Cd2+ (80 microM), a calcium channel blocker, also reversibly abolished the outward current. 5. The current was delayed in onset and was sustained over the length of a 150 ms-duration depolarizing pulse. The outward current reached a peak plateau and then decayed slowly. The decay was fitted by a single exponential with a time constant of 9.0 +/- 2.2 s. The decay constants did not show a dependence on voltage but rather on intracellular Ca2+. The time course of recovery from this decay was complex with full recovery taking > 190 s. 6. 4-AP (7 mM), dendrotoxin (100 nM), apamin (40-80 nM), and charybdotoxin (10-100 nM) had no effect on the sustained outward current. In contrast Ba2+ (200 microM) and tetraethylammonium inhibited the current, the latter in a dose-dependent manner (apparent concentration giving 50% of maximal inhibition (IC50) = 0.51 mM). 7. The neurohypophysial terminal outward current recorded here corresponds most closely to a Ca(2+)-activated K+ current (IK(Ca)) and not to a delayed rectifier or IA-like current. It also has properties different from that of the Ca(2+)-dependent outward current described in the magnocellular neuronal cell bodies of the hypothalamus. 8. A large conductance channel is often observed in isolated rat neurohypophysial nerve terminals. The channel had a unit conductance of 231 pS in symmetrical 150 mM K+.(ABSTRACT TRUNCATED AT 400 WORDS)