Although glycine has been assumed to be the sole endogenous coagonist at NMDA-associated glycine receptors, recent descriptions of endogenous D-serine in the brain indicate that this assumption is probably not valid. D-Serine is a stereospecific agonist of the NMDA-associated glycine receptor, with an affinity equal to or greater than that of glycine but with no affinity for the strychnine-sensitive glycine receptor. In the current studies, we assessed the levels and metabolic sources of D-serine in rat neocortical synaptosomal preparations. Previous studies have demonstrated that CNS serine and glycine are synthesized de novo primarily via a phosphorylated pathway, originating with the glycolytic intermediate phosphoglycerate. The rate-limiting step in the synthesis of serine is the hydrolysis of phosphoserine by phosphoserine phosphatase (EC 22.214.171.124). In synaptosomal preparations we have demonstrated high endogenous levels of D-serine and the uptake of L-phosphoserine along with its hydrolysis to both L-serine and D-serine, which are preferentially released into the medium. Experiments with both intact and lysed synaptosomal preparations demonstrated hydrolysis of D-phosphoserine to only D-serine and inhibition of hydrolysis by the phosphoserine phosphatase inhibitor 2-amino-3-phosphonopropionic acid (AP3). The lack of stereospecificity for synaptosomal hydrolysis of phosphoserine and the inhibitory actions of AP3 are consistent with the presence of phosphoserine phosphatase in synaptosomes and further indicate that epimerization of serine can occur during or subsequent to the hydrolysis of L-phosphoserine but not D-phosphoserine. In conclusion, these studies demonstrate that phosphoserine phosphatase may be an important enzyme in regulating the steady-state levels of D-serine in neocortical synaptosomes.