Nicotine modulates excitatory and inhibitory transmission in the hippocampus by acting on receptors located on various cellular compartments. We report that nicotine, applied for 5-10 min at concentrations similar to those found during smoking (0.5-5 M), resulted in all CA1 pyramidal neurones in a marked, phasic and tonic increase in the frequency and amplitude of spontaneous inhibitory currents. This effect was fully prevented by pre-incubation with the sodium channel blocker tetrodotoxin and was partially inhibited by the two nicotinic receptor antagonists methyllicaconitine (MLA) and dihydro-beta-erythroidine (DHbetaE). We conclude that, under conditions found during smoking, nicotine enhances inhibitory transmission, an effect exclusively mediated through an enhancement of the firing rate of interneurones, without changes in spontaneous quantal release of GABA.