The levels of CB1 cannabinoid receptors in the basal ganglia are the highest in the brain, comparable to the levels of dopamine receptors, a major transmitter in the basal ganglia. This localization of receptors is consistent with the profound effects on motor function exerted by cannabinoids. The output nuclei of the basal ganglia, the globus pallidus (GP) and substantia nigra reticulata (SNr), apparently lack intrinsic cannabinoid receptors. Rather, the receptors are located on afferent terminals, the striatum being the major source. Cannabinoids blocked the inhibitory action of the striatal input in the SNr. Furthermore, cannabinoids blocked the excitatory effect of stimulation of the subthalamic input to the SNr revealing, along with data from in situ hybridization studies, that this input is another likely source of cannabinoid receptors to the SNr. Similar actions of cannabinoids were observed in the GP. Behavioral studies further revealed that the action of cannabinoids differs depending upon which input to the output nuclei of the basal ganglia is active. The inhibitory striatal input is quiescent and the cannabinoid action is observable only upon stimulation of the striatum, while the noticeable effect of cannabinoids under basal conditions would be on the tonically active subthalamic input. These data suggest that the recently discovered endogenous cannabinergic system exerts a major modulatory action in the basal ganglia by its ability to block both the major excitatory and inhibitory inputs to the SNr and GP.