In vasoactive intestinal polypeptide (VIP)-immunoreacted preparations, bipolar neurons are the cells most commonly labelled. The VIP-positive axon terminals form symmetrical synapses, and their most common postsynaptic targets are small and medium sized dendrites. These are of both smooth and spiny types. Additionally, there is a concentration of VIP-positive axon terminals around the cell bodies of pyramidal neurons, and it is suggested that an important function of VIP-labelled bipolar cells is to inhibit vertically oriented groups of pyramidal cells. In order to further examine the features of axon terminals that label with VIP antibodies, conventionally prepared material was examined by electron microscopy. Those terminals which label with VIP antibody are characterized by irregular profiles of varying sizes and shapes, and by containing closely packed pleomorphic vesicles. Such terminals form symmetrical synapses. The junctions are not well marked by associated cytoplasmic densities, but there is an inherent density within the synaptic cleft. It is suggested that these features characterize all axon terminals in which GABA coexists with peptides in cerebral cortex.