The intrinsic electrophysiology and morphology of neurons from layers II and III of the lateral entorhinal cortex (EC) was investigated in a rat brain slice preparation by intracellular recording and biocytin labeling. Morphologically, we distinguished three groups of layer II principal neurons. The most numerous group included cells with multiple radiating dendrites that spread over layers II and I in a fan-like fashion. While morphologically "fan" neurons were similar to the "stellate" cells of the medial EC, electrophysiologically the fan cells lacked the persistent rhythmic subthreshold oscillations and the very pronounced time-dependent inward rectification typical of the stellate cells. The second group consisted of pyramidal cells that manifested regular spike firing and had a more negative resting potential and a longer spike duration than the fan cells. In the third group we included all those neurons that had diverse multipolar appearances distinct from the fan cells. Neurons in this group had electrophysiological profiles intermediate between those of the fan and pyramidal cells. All neurons recorded in layer III were pyramidal in shape with a basal dendritic tree that could extend into layer V and an axon that could also give off collaterals into layer V. Electrophysiologically, layer III pyramidal cells were very similar to those of layer II. On the basis of these and other data we suggest that in different EC regions layer II neurons may be conducting more input-dependent specialized processing, while cells from layer III may perform a more global or generalized function.