The nonapeptide vasopressin acts both as a hormone and as a neurotransmitter/neuromodulator. As a hormone, its target organs include kidney, blood vessels, liver, platelets and anterior pituitary. As a neurotransmitter/neuromodulator, vasopressin plays a role in autonomic functions, such as cardiovascular regulation and temperature regulation and is involved in complex behavioral and cognitive functions, such as sexual behavior, pair-bond formation and social recognition. At the neuronal level, vasopressin acts by enhancing membrane excitability and by modulating synaptic transmission. The present review will focus on the electrophysiological effects of vasopressin at the cellular level. A large proportion of the experiments summarized here have been performed in in vitro systems, especially in brain and spinal cord slices of the rat. Vasopressin exerts a powerful excitatory action on motoneurons of young rats and mice. It acts by generating a cationic inward current and/or by reducing a potassium conductance. In addition, vasopressin enhances the inhibitory synaptic input to motoneurons. By virtue of these actions, vasopressin may regulate the functioning of neuronal networks involved in motor control. In the amygdala, vasopressin can directly excite a subpopulation of neurons, whereas oxytocin, a related neuropeptide, can indirectly inhibit these same neurons. In the lateral septum, vasopressin exerts a similar dual action: it excites directly a neuronal subpopulation, but causes indirect inhibition of virtually all lateral septal neurons. The actions of vasopressin in the amygdala and lateral septum may represent at least part of the neuronal substrate by which vasopressin influences fear and anxiety-related behavior and social recognition, respectively. Central vasopressin can modulate cardiovascular parameters by causing excitation of spinal sympathetic preganglionic neurons, by increasing the inhibitory input to cardiac parasympathetic neurons in the nucleus ambiguus, by depressing the excitatory input to parabrachial neurons, or by inhibiting glutamate release at solitary tract axon terminals. By acting in or near the hypothalamic supraoptic nucleus, vasopressin can influence magnocellular neuron activity, suggesting that the peptide may exert some control on its own release at neurohypophyseal axon terminals. The central actions of vasopressin are mainly mediated by receptors of the V(1A) type, although recent studies have also reported the presence of vasopressin V(1B) receptors in the brain. Major unsolved problems are: (i) what is the transduction pathway activated following stimulation of central vasopressin V(1A) receptors? (ii) What is the precise nature of the cation channels and/or potassium channels operated by vasopressin? (iii) Does vasopressin, by virtue of its second messenger(s), interfere with other neurotransmitter/neuromodulator systems? In recent years, information concerning the mechanism of action of vasopressin at the neuronal level and its possible role and function at the whole-animal level has been accumulating. Translation of peptide actions at the cellular level into autonomic, behavioral and cognitive effects requires an intermediate level of integration, i.e. the level of neuronal circuitry. Here, detailed information is lacking. Further progress will probably require the introduction of new techniques, such as targeted in vivo whole-cell recording, large-scale recordings from neuronal ensembles or in vivo imaging in small animals.