Glutamic acid decarboxylase (GAD, EC 220.127.116.11), the enzyme which catalyzes the alpha-decarboxylation of L-glutamate to form the neurotransmitter gamma-aminobutyric acid (GABA), was localized immunocytochemically in rat neostriatum, pallidum and entopeduncular nucleus. A large amount of GAD-positive reaction product was observed in both the pallidum and entopeduncular nucleus in light microscopic preparations and was localized ultrastructurally to axon terminalis that surrounded dendrites and large somata. In the neostriatum the relative numbers of GAD-positive axons terminals per unit area were substantially less than in the pallidum. GAD-positive terminals predominantly formed symmetric synapses with somata, dendrites and spines, but a small number of them formed asymmetric synapses with either dendrites or spines. The presence of GAD within these terminals is consistent with results of other investigations which have indicated that the striatopallidal and striatoentopeduncular pathways as well as neostriatal local circuit neurons and/or collaterals from neostriatal projection neurons, use GABA as a neurotransmitter. GAD-positive reaction product was also localized within the somata and dendrites of neostriatal and pallidal neurons in colchicine-injected preparations. The GAD-positive somata in the pallidum were medium-sized neurons and since such cells project to the substantia nigra, our results are in agreement with those from other studies which demonstrate a GABAergic, pallidonigral pathway. In the neostriatum, GAD-positive somata were identified light microscopically as medium-sized neurons with either round or fusiform shapes. Electron microscopic examinations also showed GAD-positive reaction product within the perikaryal and dendritic cytoplasm of these neurons, as well as in dendritic spines. These findings are in accord with the results of studies which have indicated that medium-sized, spinous neurons of the neostriatum give rise to a GABAergic, striatonigral pathway. The significance of GAD localization within these neostriatal neurons is discussed in relation to recent findings which show that substance P is contained within this same class of striatonigral projection neuron.