We studied the intrapancreatic localization of peptide YY (PYY) and the effects of PYY on insulin and glucagon secretion in the mouse. Immunofluorescence staining of mouse pancreatic tissue showed that PYY occurred within islet cells. These cells were located preferentially at the periphery of the islets. Sequential and simultaneous double immunostaining revealed that most PYY cells also displayed glucagon immunoreactivity; some PYY cells contained immunoreactive pancreatic polypeptide (PP). At the electromicroscopic level, PYY immunoreactivity was demonstrated within the secretory granules of both glucagon cells and of a small granular cell type, which showed structural similarities to PP cells. In in vivo experiments, PYY at dose levels between 0.53 and 8.5 nmol/kg had no influence on basal plasma levels of insulin, glucagon, or glucose. In contrast, insulin secretion stimulated by glucose or the cholinergic agonist carbachol was inhibited by PYY (by 33 and 26%, respectively, at 4.25 nmol/kg). Similarly, carbachol-induced glucagon secretion was inhibited by PYY (by 47% at 4.25 nmol/kg). We conclude that PYY occurs in islet cells of the mouse pancreas, most of which are glucagon cells, and that PYY inhibits stimulated insulin and glucagon secretion in vivo in the mouse.