Deep brain stimulation (DBS) is a widely used neurosurgical approach to treating tremor and other movement disorders. In addition, the use of DBS in a number of psychiatric diseases, including obsessive-compulsive disorders and depression, is currently being tested. Despite the rapid increase in the number of individuals with surgically implanted stimulation electrodes, the cellular pathways involved in mediating the effects of DBS remain unknown. Here we show that DBS is associated with a marked increase in the release of ATP, resulting in accumulation of its catabolic product, adenosine. Adenosine A1 receptor activation depresses excitatory transmission in the thalamus and reduces both tremor- and DBS-induced side effects. Intrathalamic infusion of A1 receptor agonists directly reduces tremor, whereas adenosine A1 receptor-null mice show involuntary movements and seizure at stimulation intensities below the therapeutic level. Furthermore, our data indicate that endogenous adenosine mechanisms are active in tremor, thus supporting the clinical notion that caffeine, a nonselective adenosine receptor antagonist, can trigger or exacerbate essential tremor. Our findings suggest that nonsynaptic mechanisms involving the activation of A1 receptors suppress tremor activity and limit stimulation-induced side effects, thereby providing a new pharmacological target to replace or improve the efficacy of DBS.