In mollusks as in other animals, peptides can act as hormones, growth factors, and neurotransmitters. The presence of insulin in vertebrate brain as well as its actions on nerve cells led us to examine the electrophysiological effects of the mammalian hormone on Aplysia neurons. Application of insulin extracellularly causes hyperpolarization of L14 and L10, identified neurons of the abdominal ganglion. This hyperpolarization is associated with a decreased membrane conductance that reverses at -35 mV. We also injected inositol phosphate glycan (IPG) into the identified neurons. This complex sugar, which was purified from rat liver and which is a putative second messenger for insulin in nonneural vertebrate cells (Saltiel and Cuatrecasas, 1986; Saltiel, Osterman, and Darnell, 1988), causes hyperpolarization with decreased membrane conductance in L14 and L10 similar to the effects of insulin. Furthermore, exposure of isolated ganglia to insulin results in the generation of IPG with a compensating decrease in its glycosyl-phosphatidylinositol precursor. We suggest that, in addition to its other roles, insulin may function as a neuropeptide transmitter using IPG as a second messenger.