The GABAergic properties of dissociated neurons from cerebral cortex of neonatal rats were studied in primary culture using electrophysiological, biochemical and immunohistochemical methods. Cultured neurons had a resting potential of -50 to -60 mV and exhibited spontaneous excitatory and inhibitory synaptic currents. Non-spontaneous (elicited) ionic currents were produced by direct application of GABA and glutamate. Cultures contained measurable amounts of GABA from the first day in culture; GABA content reached a plateau around the 10th day of culture, and continued, nearly unchanged, until the 21st day of culture. Immunohistochemistry showed that 45% of the total cells in culture contained glutamic acid decarboxylase (GAD). Octadecaneuropeptide (ODN), a putative neuroregulatory peptide for benzodiazepine recognition sites, was present in approximately 28% of all neurons. Ninety-three percent of ODN-positive cells demonstrated GABAergic properties as well by displaying GAD-immunoreactivity. The peptide GABA-modulin (GM), a putative GABA receptor modulator, was found in about 75% of all neurons, with a further 65% of these cells exhibiting GAD-immunoreactivity. Cells immunopositive for neuropeptide Y (NPY), somatostatin (SRIF), and cholecystokinin-octapeptide (CCK), were found at much lower incidence (1-4%). Double-labelling studies showed that 90-97% of the cells positive for NPY, SRIF and CCK were also positive for GAD. Cells immunoreactive with serotonin or tyrosine hydroxylase were not detected. We suggest that primary cultures of neonatal cortical neurons may provide a useful experimental model to investigate the function and the modulation of GABAergic neurotransmission in the cerebral cortex.