In a slice preparation of rat piriform cortex, both intracellular and extracellular techniques were used to examine the pharmacological and electrophysiological actions of serotonin (5-HT). Bath application of 5-HT resulted in either depolarization (57%), hyperpolarization (34%) or no change (9%) in membrane potential of cells in the pyramidal cell layer (layer II) of piriform cortex. Additionally, when KCl-containing electrodes were used, 5-HT induced an increase in depolarizing synaptic potentials in 41% of these cells. It was concluded that these potentials were reverse inhibitory post-synaptic potentials (IPSPs) because they were blocked by bicuculline and tetrodotoxin. The induction of IPSPs by 5-HT was blocked by the 5-HT2-selective antagonist ritanserin. By recording extracellularly in the presence of 5-HT, a group of 5-HT-activated, putative interneurons was found at the border of layers II and III of piriform cortex, 5-HT but not norepinephrine activation was blocked by ritanserin. The actions of 5-HT were mimicked by the 5-HT2 agonist alpha-methyl-5-HT; the 5-HT2 partial agonist, 2,5-dimethoxy-4-methyl-amphetamine had a small agonist action of its own and blunted the effect of 5-HT. Activation of a larger group of putative interneurons by the more universal excitant N-methyl-D-aspartate showed that the 5-HT-activated interneurons represented 23% of the interneurons located on the border between layers II and III. We conclude that 5-HT induces IPSPs in layer II pyramidal cells by activating a subpopulation of interneurons at the border of layers II and III of piriform cortex.