The hippocampal formation is thought to contribute to both addictive behaviors and to psychotic disorders, and the actions of the neurotransmitter dopamine are intimately involved with these disease states. We have used both whole-cell and extracellular recording techniques in hippocampal slices to investigate the actions of both cocaine and dopamine receptor agonists in the CA1 region. In the presence of cocaine (10 microM), endogenously released dopamine decreased monosynaptic inhibitory postsynaptic currents (IPSCs) evoked from stratum radiatum but not from stratum oriens. This effect of cocaine was not blocked by the D(1/5) antagonist SCH 23390 ({R-(+)-7-chloro-8-hydroxy-3-methyl-1-phenyl-2,3,4,5-tetrahydro-1H-3-benzazepine}) (3 microM), whereas several D(2)-like dopamine receptor antagonists prevented the cocaine-induced decrease in the IPSC. The most selective of the effective antagonists tested was the D(3) antagonist, U 99194 ({5,6-dimethoxy-indan-2-yl dipropylamine}) maleate (1 microM). An exogenously applied D(3)-selective dopamine receptor agonist, PD 128907 ({(+)-(4aR, 10bR)-3,4,4a,10b-tetrahydro-4-propyl-2H,5H-[1]-benzopyrano-[4,3-b]-1,4-oxazin-9-ol}) (1 microM), also significantly inhibited the IPSC, providing further evidence that the activation of the D(3) subtype of dopamine receptor by endogenously released dopamine can modulate inhibition in the CA1 region. This disinhibitory action on pyramidal cells also increased synaptic excitability following Schaffer collateral stimulation, as demonstrated by either a decrease in paired-pulse inhibition of the population spike response or by an increase in the excitatory component of the mixed synaptic response evoked from stratum radiatum. These actions indicate that the activation of D(3) receptors by endogenously released dopamine, especially under conditions of transporter blockade, may significantly impact the processing of synaptic information through the stratum radiatum layer of the hippocampus.