Thalamocortical circuits that govern cortical rhythms and ultimately effect sensory transmission consist of three major interconnected elements: excitatory thalamocortical and corticothalamic neurons and GABAergic cells in the reticular thalamic nucleus. Based on the present results, a fourth component has to be added to this scheme. GABAergic fibres from an extrareticular diencephalic source were found to selectively innervate relay cells located mainly in higher-order thalamic nuclei. The origin of this pathway was localized to zona incerta (ZI), known to receive collaterals from corticothalamic fibres. First-order nuclei were innervated only in zones showing a high density of calbindin-positive neurons. The large GABA-immunoreactive incertal terminals established multiple contacts preferentially on the proximal dendrites of relay cells via symmetrical synapses with multiple release sites. The distribution, ultrastructural characteristics and postsynaptic target selection of extrareticular terminals were similar to type II muscarinic acetylcholine receptor-positive boutons, which constituted up to 49% of all GABAergic terminals in the posterior nucleus. This suggests that a significant proportion of the GABAergic input into certain thalamic territories involved in higher-order functions may have extrareticular origin. Unlike the reticular nucleus, ZI receives peripheral and layer V cortical input but no thalamic feedback; it projects to brainstem centres and has extensive intranuclear recurrent collaterals. This indicates that ZI exerts a conceptually new type of inhibitory control over the thalamus. The proximally situated, multiple active zones of ZI terminals indicate a powerful influence on the firing properties of thalamic neurons, which is conveyed to multiple cortical areas via relay cells which have widespread projections to neocortex.