The subthalamic nucleus (STN) is one of the principal sources of excitatory glutamatergic input to dopaminergic neurons of the substantia nigra, yet stimulation of the STN produces both excitatory and inhibitory effects on nigral dopaminergic neurons recorded extracellularly in vivo. The present experiments were designed to determine the sources of the excitatory and inhibitory effects. Synaptic potentials were recorded intracellularly from substantia nigra pars compacta dopaminergic neurons in parasagittal slices in response to stimulation of the STN. Synaptic potentials were analyzed for onset latency, amplitude, duration, and reversal potential in the presence and absence of GABA and glutamate receptor antagonists. STN-evoked depolarizing synaptic responses in dopaminergic neurons reversed at approximately -31 mV, intermediate between the expected reversal potential for an excitatory and an inhibitory postsynaptic potential (EPSP and IPSP). Blockade of GABA(A) receptors with bicuculline caused a positive shift in the reversal potential to near 0 mV, suggesting that STN stimulation evoked a near simultaneous EPSP and IPSP. Both synaptic responses were blocked by application of the glutamate receptor antagonist, 6-cyano-7-nitroquinoxalene-2,3-dione. The confounding influence of inhibitory fibers of passage from globus pallidus and/or striatum by STN stimulation was eliminated by unilaterally transecting striatonigral and pallidonigral fibers 3 days before recording. The reversal potential of STN-evoked synaptic responses in dopaminergic neurons in slices from transected animals was approximately -30 mV. Bath application of bicuculline shifted the reversal potential to approximately 5 mV as it did in intact animals, suggesting that the source of the IPSP was within substantia nigra. These data indicate that electrical stimulation of the STN elicits a mixed EPSP-IPSP in nigral dopaminergic neurons due to the coactivation of an excitatory monosynaptic and an inhibitory polysynaptic connection between the STN and the dopaminergic neurons of substantia nigra pars compacta. The EPSP arises from a direct monosynaptic excitatory glutamatergic input from the STN. The IPSP arises polysynaptically, most likely through STN-evoked excitation of GABAergic neurons in substantia nigra pars reticulata, which produces feed-forward GABA(A)-mediated inhibition of dopaminergic neurons through inhibitory intranigral axon collaterals.