Kainate receptors mediate both direct excitatory and indirect modulatory actions in the CNS. We report here that kainate has both pre- and postsynaptic actions in layer II/III pyramidal neurons of rat prefrontal cortex. Application of low concentration of kainate (50-500 nM) increased the amplitude of evoked excitatory postsynaptic currents (EPSCs) whereas higher concentrations (3 microM) caused a decrease. The frequency of spontaneous and miniature (action potential-independent) EPSCs was increased by low concentrations of kainate without affecting their amplitudes, suggesting a presynaptic mechanism of action. The facilitatory and inhibitory effects of kainate were mimicked by the GluR5 subunit selective agonist ATPA. In addition to decreasing EPSC amplitudes, high concentrations of kainate and ATPA induced an inward current which was not blocked by AMPA- or NMDA-receptor antagonists GYKI52466 and D-APV, respectively. The inward currents were blocked by the AMPA/KA receptor antagonist CNQX, indicating the presence of postsynaptic kainate receptors. Single shock stimulation in the presence of GYKI52466 and D-APV evoked an EPSC which was blocked by CNQX. The GluR5 antagonist LY382884 changed paired-pulse facilitation to paired pulse depression, indicating that synaptically released glutamate can activate presynaptic kainate receptors. These results suggest that kainate receptors containing GluR5 subunits play a major role in glutamatergic transmission in rat neocortex, having both presynaptic modulatory and direct postsynaptic excitatory actions.