We have generated transgenic rats expressing an arginine vasopressin (AVP)-enhanced green fluorescent protein (eGFP) fusion gene. The expression of the eGFP gene and strong fluorescence were observed in the supraoptic nucleus (SON), the paraventricular nucleus (PVN), and the suprachiasmatic nucleus (SCN) in transgenic rats. The hypothalamo-neurohypophyseal tract, isolated SON neurons, and isolated axon terminals in the neurohypophysis also showed robust eGFP fluorescence. Water deprivation for 2 d increased the fluorescence of the eGFP in the SON and the PVN but not the SCN. The whole-cell patch-clamp technique was then used to record the electrical activities specifically identifying eGFP-expressing SON, PVN, and SCN AVP neurons in in vitro brain slice preparations. The AVP-eGFP transgenic rats are a unique new tool with which to study the physiological role of AVP-secreting neurons in the central nervous system and the dynamics of the regulation of AVP secretion in the living neurons and their axon terminals.