We have developed a slice preparation of the mouse basal ganglia which contains portions of the striatum, external pallidum, subthalamic nucleus and substantia nigra and the neocortex. This basal ganglia slice is unique in preserving functional direct and indirect connections between the striatum and the substantia nigra as well as interconnectivity between the globus pallidus and the subthalamic nucleus. We used fiber tract tracing studies and electrophysiological recordings to demonstrate the full functionality of these pathways. Deposits of 1,1'-dioctadecyl-3,3,3',3'-tetra-methylindocarbocyamine perchlorate in the different basal ganglia resulted in labeled fibers in each of their target nuclei. Confirming these results, electrical stimulation of the different nuclei elicited whole-cell recorded postsynaptic potentials in their target neurons with an appropriate pharmacological profile. Electrical and glutamate activation of the striatum evoked bursts of glutamatergic and GABAergic activities in whole-cell recorded nigral neurons indicating that the direct and indirect pathways are operative in this slice. It also showed that the responses evoked are not due to fibers en passant but to the activation of striatal cell bodies. These findings provide the first direct evidence for a preserved basal ganglia circuitry in vitro and make the basal ganglia slice a suitable preparation for analyzing the activity of the direct and indirect pathways in physiological and pathological conditions.