The neuropeptide, substance P (SP), produces a spectrum of behavioural effects. When given locally into the substantia nigra, SP induces dopamine release in the ipsilateral striatum and produces contralateral rotation in a dose-dependent, but bell-shaped, manner. Similar dose-response relationships have been observed for SP and other peptides in different bioassays. To test whether SP fragmentation is responsible for this phenomenon, SP(1-7), which is the main SP fragment in rat CNS, was injected intranigrally. SP(1-7) was found to act as a very potent antagonist against the SP-induced responses and was formed locally in the nigra after SP injection. It is proposed that SP(1-7) is an endogenous modulator of SP actions. Generation of peptide fragments, which retain receptor affinity but not efficacy, may be a general mechanism for autoregulation in peptidergic systems.