In this study we examined the distribution of binding sites for [ 3H]N-acetyl-aspartylglutamate (NAAG) in the rat lateral septal nucleus (LSN) and the effect of iontophoretically applied NAAG on neuronal firing in this area. A high density of [ 3H]NAAG binding sites was found in the dorsolateral part of the LSN. Binding in the intermediate/ventral part of the LSN and medial septum was less denses. NAAG excited 75% of the dorsal neurons in the LSN, but only 36% of the cells in the intermediate/ventral part. Glutamic diethylester, an amino acid antagonist, depressed responses to NAAG to a similar extent as responses to quaiqualate. The antagonist amino phosphonovaleric acid, which suppressed responses to N-methyl- d-aspartate almost completely, reduced NAAG-evoked responses only by 40%. A possible role of NAAG as excitatory transmitter in the LSN is discussed.