Unilateral injection of 6-hydroxydopamine (6-OHDA) into the caudate nucleus of rat caused degeneration of dopaminergic terminals, evidenced by significant (P < 0.05) elevation of spontaneous and drug-induced motor behaviour, enhanced DA receptor binding and significant increase in the neuronal firing rate of caudate neurons, suggesting supersensitivity of dopaminergic receptors. Eight weeks following the transplantation of embryonic cell suspensions from caudate at the lesioned site, a significant restoration of the enhanced 3H spiperone binding and neuronal activity of caudate neurons was observed in comparison with lesioned rats. These results clearly demonstrate that transplanted embryonic neuronal tissue at the lesioned site is capable of restoring the neuronal deficits caused by 6-OHDA as evidenced by significant amelioration in neurochemical, behavioral and electrophysiological alterations.