In vivo intracellular recordings of spontaneous activity of neostriatal spiny cells revealed two-state behavior, i.e., characteristic shifts of membrane potential between two preferred levels. The more polarized level, called the Down state, varied among neurons from -61 to -94 mV. The more depolarized level, called the Up state, varied among neurons form -71 to -40 mV. For any one neuron, the membrane potential in the Up and Down states was constant over the period of observation (from 15 min to 4 hr), and the cells spent little time in transition between states. The level of membrane potential noise was higher in the Up state than in the Down state. Spontaneous membrane potential fluctuations were not abolished by experimental alteration of the membrane potential, but the time spent in each state was altered when intracellular current was used to vary the baseline membrane potential. Neither the sodium nor the calcium action potential that could be evoked by depolarization of spiny neurons was required for the occurrence of spontaneous shifts of membrane potential. Blockade of these action potentials using intracellular injection of QX314 and D890, respectively, altered neither the incidence of the membrane potential shifts nor the preferred membrane potential in either state. In contrast, antagonism of voltage-dependent potassium channels with intracellular cesium altered membrane potential shifts. In the presence of QX314 and D890, intracellular injection of cesium caused little or no change in the Down state and a large depolarizing shift in the Up state (to about -20 mV). Under these circumstances, the neuron responded to current in a nearly linear manner, and membrane conductance was found to be increased in the Up state, attributable to a membrane conductance with the same reversal potential as that of the synaptic potential evoked by cortical stimulation. These results indicate that the event underlying the Up state is a maintained barrage of synaptic excitation, but that the membrane potential achieved during the Up state in neostriatal spiny neurons is determined by dendritic potassium channels that clamp the membrane potential at a level determined by their voltage sensitivity. Neostriatal spiny neurons ordinarily receive enormously powerful excitation, which would drive the cells to saturation, and probably destroy them, if it were not for these potassium currents.