D-serine, which is synthesized by the enzyme serine racemase (SR), is a co-agonist at the N-methyl-D-aspartate receptor (NMDAR). Crucial to an understanding of the signaling functions of D-serine is defining the sites responsible for its synthesis and release. In order to quantify the contributions of astrocytes and neurons to SR and D-serine localization, we used recombinant DNA techniques to effect cell type selective suppression of SR expression in astrocytes (aSRCKO) and in forebrain glutamatergic neurons (nSRCKO). The majority of SR is expressed in neurons: SR expression was reduced by ~65% in nSRCKO cerebral cortex and hippocampus, but only ~15% in aSRCKO as quantified by western blots. In contrast, nSRCKO is associated with only modest decreases in D-serine levels as quantified by HPLC, whereas D-serine levels were unaffected in aSRCKO mice. Liver expression of SR was increased by 35% in the nSRCKO, suggesting a role for peripheral SR in the maintenance of brain D-serine. Electrophysiologic studies of long-term potentiation (LTP) at the Schaffer collateral-CA1 pyramidal neuron synapse revealed no alterations in the aSRCKO mice versus wild-type. LTP induced by a single tetanic stimulus was reduced by nearly 70% in the nSRCKO mice. Furthermore, the mini-excitatory post-synaptic currents mediated by NMDA receptors but not by AMPA receptors were significantly reduced in nSRCKO mice. Our findings indicate that in forebrain, where D-serine appears to be the endogenous co-agonist at NMDA receptors, SR is predominantly expressed in glutamatergic neurons, and co-release of glutamate and D-serine is required for optimal activation of post-synaptic NMDA receptors.