1. Intracellular microelectrode recordings were used to study the cellular location, the receptor pharmacology, and the mechanism of action of adenosine on pyramidal cells and presynaptic axonal endings in area CA3 of organotypic hippocampal slice cultures. 2. Adenosine (bath applied at 50 microM) caused a 10-15 mV hyperpolarization of CA3 cells, as well as a 75-100% decrease in the amplitude of excitatory and polysynaptic inhibitory postsynaptic potentials (EPSPs and IPSPs). Adenosine had no effect on the amplitude of monosynaptic IPSPs elicited in the presence of excitatory amino acid receptor antagonists, but did reduce the amplitude of isolated EPSPs, elicited after blocking GABAA receptors and reducing subsequent epileptic bursts with excitatory amino acid receptor antagonists. These data indicate that adenosine receptors are located on excitatory, but not inhibitory, presynaptic elements. 3. The A1 receptor antagonist 8-cyclopentyl-1,3-dipropylxanthine (DPCPX, bath applied at 200 nM) blocked the pre- and postsynaptic actions of adenosine. DPCPX had no effect on the amplitude of control synaptic responses, suggesting that there is no tonic activation of adenosine receptors in hippocampal slice cultures under control conditions. The A1 receptor agonists R-N6-phenylisopropyladenosine (R-PIA) mimicked all pre- and postsynaptic actions of adenosine. 4. Pertussis toxin pretreatment (500 ng/ml for 48 h) prevented adenosine from activating postsynaptic K+ conductance, but not from inhibiting EPSPs. In contrast, stimulation of protein kinase C with phorbol ester (phorbol 12, 13-dibutyrate, 1 microM for 10 min) reduced the presynaptic, but not the postsynaptic, actions of adenosine. 5. Barium (bath applied at 1 mM) blocked the adenosine-activated K+ conductance, but not the inhibition of isolated EPSPs by adenosine. 6. Adenosine at 0.03-1 microM reduced the frequency of, or blocked, spontaneous epileptiform bursting produced by bicuculline. DPCPX (200 nM) increased the rate of spontaneous bursting, consistent with a tonic activation of adenosine receptors during hyperactivity, and led to the development of prolonged ictal-like bursts, suggesting that the endogenous release of adenosine may contribute to the termination of epileptic bursts. 7. We conclude that adenosine acts at pre- and postsynaptic receptors which are pharmacologically indistinguishable. Postsynaptically, adenosine increases a barium-sensitive K+ conductance via a pertussis toxin-sensitive GTP-binding protein. The presynaptic action of adenosine must, however, be mediated by some other mechanism.