1. Local neuronal circuits in CA3 of hippocampal slices were studied by recording excitatory and inhibitory postsynaptic potentials (EPSPs and IPSPs) intracellularly during glutamate microapplication in CA3. Control experiments validated this approach by providing evidence that glutamate microdrops stimulated neurons but not axons-of-passage or axon terminals in CA3. 2. Glutamate microdrops (10-20 mM, 10-20 microns diam) increased the firing frequency of extracellularly recorded dentate granule cells for 5-10 s when applied to their somata but not when applied to their mossy fiber axons and terminals in the hilus and in CA3. 3. Glutamate microapplications to granule cell somata, but not to mossy fiber axons, also increased the frequency of intracellularly recorded EPSPs in CA3 pyramidal cells for 5-10 s. This provided a second line of evidence that glutamate did not cause firing in mossy fiber axons synapsing in CA3. 4. In slices where the CA3 region was surgically separated from the dentate gyrus and CA2, glutamate microdrops placed in the CA3 stratum pyramidale within 400 microns of intracellularly recorded pyramidal cells increased the frequency of EPSPs and IPSPs. Tetrodotoxin (1 microgram/ml) blocked these increases in PSP frequency, indicating that they did not result from glutamate-induced depolarization and associated transmitter release from presynaptic terminals. Increases in PSP frequency were interpreted to reflect glutamate activations of CA3 neurons with local synaptic connections to recorded cells. 5. Low concentrations of picrotoxin (PTX, 5-10 microM) blocked glutamate-induced increases in IPSP frequency and often revealed increases in EPSP frequency where they were not previously observed. This suggests that recurrent inhibitory circuits normally mask or block transmission through recurrent excitatory pathways in CA3. 6. In five experiments following PTX treatment (7.5-10 microM), large and prolonged (up to 2 min) increases in EPSP frequency were observed in CA3 pyramidal cells to glutamate microapplications in CA3. Rhythmic epileptiform bursts eventually occurred in two of these cases, suggesting that the protracted increases in EPSP frequency represent a form of reverberating excitation during a transition from normal to epileptic states. 7. Sixteen CA3 pyramidal cells were recorded in PTX (5-10 microM) during glutamate microapplications at 200 and 400 microns on each side of the recording site. The most consistent glutamate-induced increases in EPSP frequency occurred to microapplications 200 microns from recording sites on the hilar side.(ABSTRACT TRUNCATED AT 400 WORDS)