1. Intracellular recordings were made from pyramidal cells and from electrophysiologically identified interneurones in the CA1 region of the hippocampal slice preparation from the rat. 2. Enkephalin blocked the hyperpolarization of pyramidal cells evoked by application of glutamate to synaptically coupled inhibitory interneurones. 3. Enkephalin hyperpolarized interneurones, most probably by increasing potassium conductance; this action was blocked by the opiate antagonist, naloxone. 4. Activation of gamma-aminobutyric acid(B) receptors with baclofen in interneurones produced a similar hyperpolarization that was resistant to naloxone. 5. In addition to hyperpolarizing interneurones, enkephalin blocked the inhibitory postsynaptic potential recorded in these cells. 6. These results suggest that opiate receptors are selectively localized on inhibitory interneurones in the hippocampus and are coupled to potassium channels. Activation of these receptors causes a disinhibition of both pyramidal cells and inhibitory interneurones.