Immunocytochemical evidence for localized distribution of the Na+/Ca2+ exchange protein in nerve terminals of cultured hippocampal cells is presented together with results on the functional relevance of the exchanger in the control of [Ca2+]i and of synaptic vesicle recycling. The monoclonal antibody R3F1, directed against an epitope on the intracellular loop of the protein, revealed higher densities of expression in synaptic regions than in other parts of the neurons. Removal of extracellular Na+ produced enhanced and prolonged elevation of [Ca2+]i in nerve terminals during and after electrical stimulation of the cells. Correspondingly, initial rates of exocytosis, measured by fluorescence changes of FM 1-43 during stimulation, were faster in LiCl-containing solution than in NaCl-containing solution. By contrast, endocytosis at 20 s was the same in both solutions.