The actions of vasopressin on acutely dissociated neurons within the rat horizontal limb of the diagonal band of Broca were examined using the whole-cell patch-clamp technique. Vasopressin elicited two distinct responses in 45 of 62 neurons. In one group of cells, 300 nM vasopressin decreased voltage-activated outward currents (26/45 cells) whereas in a second group, vasopressin increased outward currents (19/45 cells). The vasopressin-mediated decrease in outward currents was blocked by 1 μM Manning compound, a V 1 receptor antagonist, suggesting that this response was mediated via V 1 receptors. In contrast, the vasopressin-induced increase in outward current was blocked by 1 μM d(CH 2) 5) 1,D-Ile 2,Ile 4,Arg 8,Ala 9, a V 2 receptor antagonist, indicating that V 2 receptor activation underlies this second response. When cells were perfused with 0 Ca 2+/50 μM Cd 2+, application of vasopressin did not cause any change in voltage-activated outward currents, suggesting that vasopressin modulates a calcium-dependent conductance. In the presence of 25 nM charybdotoxin, an I C channel antagonist, vasopressin application did not influence outward currents, indicating that vasopressin modulates I C. Currents through voltage-gated calcium channels which are responsible for activation of I C were unaffected by vasopressin, suggesting a direct effect of vasopressin, on I C channels. These observations indicate a differential modulation of I C channels by vasopressin via V 1 and V 2 receptors in the horizontal limb of the diagonal band of Broca. Our data also demonstrate the ionic mechanisms whereby vasopressin may act at V 1 or V 2 receptors to influence the excitability of the horizontal limb of the diagonal band of Broca neurons.