1. Intracellular electrophysiological techniques were employed to investigate the effects of nicotinic receptor stimulation on rat dorsolateral septal nucleus (DLSN) neurones in a submerged rat brain slice preparation. 2. Acetylcholine (in the presence of the muscarinic antagonist, atropine), nicotine or dimethylphenylpiperazinium (DMPP), applied either by pressure ejection or superfusion, produced predominantly a membrane potential hyperpolarization. 3. Following concentration-response comparisons, DMPP appeared to exhibit fewer desensitizing properties and greater efficacy than nicotine with half-maximal hyperpolarizing responses attainable at 3 and 10 microM, respectively. 4. Pharmacological analyses revealed that the agonist-induced membrane hyperpolarization was sensitive to antagonism by mecamylamine (50-100 microM) and neuronal bungarotoxin (0.2-0.3 microM), but not alpha-bungarotoxin (0.5-1.0 microM), curare (10-50 microM) or dihydro-beta-erythroidine (50-100 microM). 5. Hyperpolarizing responses to DMPP were found to reverse near the equilibrium potential for potassium and were sensitive to changes in extracellular potassium concentration as predicted by the Nernst equation. Under single-electrode voltage clamp, application of DMPP produced an outward current (75-100 pA) which approached reversal at around -88 mV. These findings indicated that the hyperpolarizing response to nicotinic receptor stimulation was mediated by changes in membrane permeability to potassium. 6. DMPP-induced membrane hyperpolarization resulted from a direct action on postsynaptic DLSN neurones since the response persisted under conditions of superfusion with calcium-free/high-magnesium media or tetrodotoxin; both conditions blocked orthodromically induced neurotransmission. The hyperpolarizing response remained unaltered in TTX but was diminished in calcium-free/high-magnesium media. Further studies revealed blockade of the DMPP response following intracellular injection of EGTA. This response was also sensitive to antagonism by various calcium-dependent potassium channel blockers including apamin, barium and tetraethylammonium. 7. Our studies reveal a novel class of CNS nicotinic receptor whose action upon stimulation by an agonist results in a membrane hyperpolarization via a calcium-dependent increase in potassium ion conductance.