During the last two decades, it has become apparent that vasopressin and oxytocin, in addition to playing a role as peptide hormones, also act as neurotransmitters/neuromodulators. A number of arguments support this notion: (i) vasopressin and oxytocin are synthesized not only in hypothalamo-neurohypophysial cells, but also in other hypothalamic and extrahypothalamic cell bodies, whose axon projects to the limbic system, the brainstem and the spinal cord. (ii) Vasopressin and oxytocin can be shed from central axons as are classical neurotransmitters. (iii) Specific binding sites, i.e. membrane receptors having high affinity for vasopressin and oxytocin are present in the central nervous system. (iv) Vasopressin and oxytocin can alter the firing rate of selected neuronal populations. (v) In-situ injection of vasopressin and oxytocin receptor agonists and antagonists can interfere with behavior or physiological regulations. Morphological studies and electrophysiological recordings have evidenced a close anatomical correlation between the presence of vasopressin and oxytocin receptors in the brain and the neuronal responsiveness to vasopressin or oxytocin. These compounds have been found to affect membrane excitability in neurons located in the limbic system, hypothalamus, circumventricular organs, brainstem, and spinal cord. Sharp electrode intracellular recordings and whole-cell recordings, done in brainstem motoneurons or in spinal cord neurons, have revealed that vasopressin and oxytocin can directly affect neuronal excitability by opening non-specific cationic channels or by closing K(+) channels. These neuropeptides can also influence synaptic transmission, by acting either postsynaptically or upon presynaptic target neurons or axon terminals. Whereas, in cultured neurons, vasopressin and oxytocin appear to mobilize intracellular Ca(++), in brainstem slices, the action of oxytocin is mediated by a second messenger that is distinct from the second messenger activated in peripheral target cells. In this review, we will summarize studies carried out at the cellular level, i.e. we will concentrate on in-vitro approaches. Vasopressin and oxytocin will be treated together. Though acting via distinct receptors in distinct brain areas, these two neuropeptides appear to exert similar effects upon neuronal excitability.