1. The effects of anandamide on K+ currents and membrane potential have been examined in freshly-isolated smooth muscle cells from rat hepatic artery and the results compared with the effects of this arachidonic acid derivative on tension and membrane potential changes in segments of whole artery. 2. In the presence of 0.3 mM L-NOARG and 10 microM indomethacin, anandamide (0.1-100 microM) and endothelium-derived hyperpolarizing factor (EDHF; liberated by acetylcholine, 0.01-10 microM) each relaxed endothelium-intact segments of hepatic artery precontracted with phenylephrine. These effects of anandamide, but not those of EDHF, were antagonized by the cannabinoid receptor antagonist, SR141716A (3 microM). 3. The relaxant effects of anandamide were unaffected by a toxin combination (apamin plus charybdotoxin, each 0.3 microM) which abolishes EDHF relaxations and were essentially unchanged in endothelium-denuded arteries. The relaxant effects of anandamide in endothelium-intact arteries were significantly reduced in a physiological salt solution containing 30 mM KCl and abolished when the K+ concentration was raised to 60 mM. 4. Anandamide (10 microM), acetylcholine (1 microM, via release of EDHF) and levcromakalim (10 microM) each markedly hyperpolarized the membrane potential of the smooth muscle cells of endothelium-intact arteries. However, when the endothelium was removed, the hyperpolarizing effects of both anandamide (10 microM) and acetylcholine were essentially abolished whereas those of levcromakalim (10 microM) were unaffected. 5. Under voltage-clamp conditions, anandamide (10 microM) abolished spontaneous transient outward currents (STOCs) in freshly-isolated single hepatic artery cells held at 0 mV but had no effect on the holding current at this potential. In current-clamp mode, the spontaneous hyperpolarizing potentials which corresponded to the STOCs were abolished with no significant change in basal membrane potential. 6. Anandamide (10 microM) abolished the iberiotoxin-sensitive K+ current (IBK(Ca)) produced by caffeine and the corresponding hyperpolarizations generated by this xanthine derivative in current-clamp mode. In contrast, anandamide had no effect on IBK(Ca) generated on exposure to NS1619 (30 microM). 7. It was concluded that anandamide is not EDHF in the rat hepatic artery. Anandamide-induced hyperpolarization is exerted indirectly and requires the presence of the endothelium. Anandamide also acts on the smooth muscle cells to inhibit processes which require functional intracellular calcium stores. This direct action seems more important than membrane hyperpolarization in relaxing phenylephrine-contracted vessels.