ABSTRACT As their name implies, local interneurones arborize within anatomically restricted regions of a nervous system, and the connections that they make establish local circuits. In arthropods, they may arborize wholly within a segmental ganglion, or within a specialized region of the brain. Local interneurones can be divided into two physiological types: spiking and nonspiking. In segmental ganglia, spiking local interneurones are largely responsible for the local processing of primary sensory inputs, whereas non-spiking ones play a major role in the control and coordination of motor neurone activity at the segmental level. By contrast, in the brain, primary visual inputs are processed mainly by non-spiking interneurones. Local interactions between neurones may occur in three ways: by the graded release of transmitter, by the presynaptic modulation of spike-evoked PSPs and by the ‘conventional’ mechanism where spike frequency is translated across a synapse as the summed amplitude of discrete spikeevoked PSPs. Although graded synaptic transmission is the only mechanism so far described for the local interactions of non-spiking interneurones, it is not limited to them. It may occur also in non-spiking neurones specialized to transmit graded signals over long distances, or in local, intraganglionic regions of motor neurones or long interneurones. The ability of spiking neurones to exert graded effects may depend upon input and output synapses being intermingled on their fine branches, at sites relatively distant from the region of spike initiation. Since these synapses are widely distributed over the neurones, local intraganglionic interactions can be seen as the summed effect of many, yet more restricted local interactions. Restricted local interactions also may occur within parts of non-spiking interneurones, but this is a conjecture, based on modelling studies, and upon considerable EM evidence for serial and reciprocal synapses in most other types of arthropod neurones.