Glutamate mediates several modes of neurotransmission in the central nervous system including recently discovered retrograde signaling from neuronal dendrites. We have previously identified the system N transporter SN1 as being responsible for glutamine efflux from astroglia and proposed a system A transporter (SAT) in subsequent transport of glutamine into neurons for neurotransmitter regeneration. Here, we demonstrate that SAT2 expression is primarily confined to glutamatergic neurons in many brain regions with SAT2 being predominantly targeted to the somatodendritic compartments in these neurons. SAT2 containing dendrites accumulate high levels of glutamine. Upon electrical stimulation in vivo and depolarization in vitro, glutamine is readily converted to glutamate in activated dendritic subsegments, suggesting that glutamine sustains release of the excitatory neurotransmitter via exocytosis from dendrites. The system A inhibitor MeAIB (alpha-methylamino-iso-butyric acid) reduces neuronal uptake of glutamine with concomitant reduction in intracellular glutamate concentrations, indicating that SAT2-mediated glutamine uptake can be a prerequisite for the formation of glutamate. Furthermore, MeAIB inhibited retrograde signaling from pyramidal cells in layer 2/3 of the neocortex by suppressing inhibitory inputs from fast-spiking interneurons. In summary, we demonstrate that SAT2 maintains a key metabolic glutamine/glutamate balance underpinning retrograde signaling by dendritic release of the neurotransmitter glutamate.