Two extreme and non-exclusive hypotheses can be put forward to account for the largely inhibitory actions of adenosine on neural activity. Adenosine formation may be linked to the balance between formation and degradation of cytoplasmic ATP and hence only be indirectly related to neurotransmission. Adenosine formed by this route must then diffuse out of the cell to reach extracellular receptor sites. It may then act on the adenosine forming cells, neighbouring neurones or other cells including the cerebral vasculature to restore energy balance. Alternatively, adenosine formation may be directly linked to neurotransmission, probably by secretion of adenine nucleotides followed by ecto-nucleotidase activity. This adenosine then acts directly at extracellular receptors to modulate the activity of the neurones from which it arises. Localization of the sites of adenosine formation, action and inactivation in the brain could help, in principle, to distinguish these two hypotheses, or to define the neurones to which each hypothesis applies. Nagy and co-workers (Neurochem. Int.16, 211-221, 1990) review what has been learnt of the location in the brain of adenosine receptors, the nucleoside transporter and adenosine deaminase. In this critique, we attempt to place these important elements of the pathway of adenosine formation, action and inactivation in a wider perspective.