Recent studies implicate dendritic endocannabinoid release from subsynaptic dendrites and subsequent inhibition of neurotransmitter release from nerve terminals as a means of retrograde signaling in multiple brain regions. Here we show that type 1 cannabinoid receptor-mediated endocannabinoid signaling is not involved in the retrograde control of synaptic efficacy at inhibitory synapses between fast-spiking interneurons and pyramidal cells in layer 2/3 of the neocortex. Vesicular neurotransmitter transporters, such as vesicular glutamate transporters (VGLUTs) 1 and 2, are localized to presynaptic terminals and accumulate neurotransmitters into synaptic vesicles. A third subtype of VGLUTs (VGLUT3) was recently identified and found localized to dendrites of various cell types. We demonstrate, using multiple immunofluorescence labeling and confocal laser-scanning microscopy, that VGLUT3-like immunoreactivity is present in dendrites of layer 2/3 pyramidal neurons in the rat neocortex. Electron microscopy analysis confirmed that VGLUT3-like labeling is localized to vesicular structures, which show a tendency to accumulate in close proximity to postsynaptic specializations in dendritic shafts of pyramidal cells. Dual whole-cell recordings revealed that retrograde signaling between fast-spiking interneurons and pyramidal cells was enhanced under conditions of maximal efficacy of VGLUT3-mediated glutamate uptake, whereas it was reduced when glutamate uptake was inhibited by incrementing concentrations of the nonselective VGLUT inhibitor Evans blue (0.5-5.0 microm) or intracellular Cl- concentrations (4-145 mm). Our results present further evidence that dendritic vesicular glutamate release, controlled by novel VGLUT isoforms, provides fast negative feedback at inhibitory neocortical synapses, and demonstrate that glutamate can act as a retrograde messenger in the CNS.