The indolamine hormone melatonin, synthesized in the retina, is thought to participate in modulating day-night cyclic variations in photoreceptor and retinal pigment epithelium (RPE) function. It has also been shown to alter the electrical activity of the RPE of the mammalian eye (Dawis and Niemeyer, 1985, Soc. Neurosci. 11, 1079:1988, Clin. Vis. Sci. 3, 109-118: Textorius and Nilsson, 1987, Doc. Ophthalmol, 65, 97-111). To determine the origin of such electrical effects studies were performed on in vitro preparations of both chick retina-RPE-choroid and RPE-choroid. In retina-RPE-choroid preparations choroidal perfusion with melatonin (2.10(-6) M) hyperpolarized the basal membrane, increased its apparent resistance, and diminished the amplitude of the c-wave of the electroretinogram (ERG). Retinal perfusion with melatonin (2.10(-6) M) first depolarized the RPE apical membrane and increased its apparent resistance and this gave way to a basal membrane hyperpolarization accompanied by an increase in basal membrane resistance. Both phases were accompanied by c-wave decreases. Experiments in RPE-choroid preparations suggested that the choroidal effect of melatonin was independent of the neural retina, while the retinal effect was more complex and probably included a neural retinal component. Retinal or choroidal melatonin (2.10(-6) M) had little or no effect on the amplitude of the light peak of the DC ERG. These results show that chick RPE membrane potentials and resistances at either the apical or basal membrane can be affected by melatonin directly, or indirectly via effects on other cells.