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1. Conditioning stimulation of the lateral olfactory tract (l.o.t.) in the rat olfactory cortex slice evoked a slow depolarization of the terminal regions of the l.o.t. The depolarization lasted about 150 ms and was abolished by the gamma-aminobutyric acid (GABA) antagonist bicuculline. 2. Excitability testing of the terminal regions of the l.o.t. showed an increase in excitability which lasted for about 150 ms following a conditioning stimulus. This increase in excitability was abolished by the calcium antagonist cadmium and by the GABA antagonists bicuculline and penicillin. 3. Superfused GABA caused a consistent decrease in the excitability of the terminal regions of the l.o.t. within the cortex but an increase in excitability of the axons within the tract itself. These effects were antagonized by bicuculline. K+ caused similar changes in excitability which were not antagonized by bicuculline. 4. The difference between the effects of superfused GABA and the effects of orthodromic conditioning can be explained if a more restricted location of action is assumed for the GABA released by conditioning stimulation. It is suggested that GABA causes a decrease in excitability at its locus of action and that the observed increases in excitability occur in adjacent areas of neuronal membrane.