The use of slice and explant preparations has allowed major advances in our understanding of the membrane physiology of mammalian hypothalamic neurons. This article will review intracellular electrophysiological studies of neurons in or immediately surrounding the supraoptic and paraventricular nuclei. Considerable information is now available on the intrinsic membrane mechanisms that control action potential generation and burst firing in magnocellular neuroendocrine cells (MNCs) within these nuclei. Neurons surrounding the paraventricular nucleus have different electrical properties than the MNCs, including low-threshold Ca2+ spikes and pronounced anomalous rectification. Bicuculline and kynurenic acid strongly depress fast IPSPs and EPSPs in MNCs, thus suggesting that inhibitory and excitatory amino acids mediate fast synaptic transmission in the hypothalamus. The effects of neuromodulators, such as noradrenaline and opioid peptides, have also been examined. Noradrenaline excites supraoptic neurons and leads to phasic firing through an alpha-1 mechanism and decreased K+-conductance. Opioid peptides act directly on mu-receptors to hyperpolarize about half of the neurons through an increased K+-conductance. In conclusion, using the magnocellular neuroendocrine system as a model, in vitro slice and explant preparations have allowed the characterization of electrophysiological properties, the identification of neurotransmitters for synaptic events, and studies on the mechanism of action of neuromodulators.