Urethane is widely used in neurophysiological experiments to anesthetize animals, yet little is known about its actions at the cellular and synaptic levels. This limits our ability to model systems-level cortical function using results from urethane-anesthetized preparations. The present study found that action potential discharge of cortical neurons in vitro, in response to depolarizing current, was strongly depressed by urethane and this was accompanied by a significant decrease in membrane resistance. Voltage-clamp experiments suggest that the mechanism of this depression involves selective activation of a Ba2+-sensitive K+ leak conductance. Urethane did not alter excitatory glutamate-mediated or inhibitory (GABA(A)- or GABA(B)-mediated) synaptic transmission. Neither the amplitude nor decay time constant of GABA(A)- or GABA(B)-mediated monosynaptic inhibitory postsynaptic currents (IPSCs) were altered by urethane, nor was the frequency of spontaneous IPSCs. These results are consistent with observations seen in vivo during urethane anesthesia where urethane produced minimal disruption of signal transmission in the neocortex.