The actions mediated by limbic system output projections of the basal ganglia were investigated by studying the effects of ventral pallidum (VP) stimulation on the activity of neurons in thalamic target nuclei, including several of the dorsal thalamic nuclei and the nucleus reticularis, using in vivo intracellular recordings in rats. Intracellular injection of Lucifer yellow was used in a subset of experiments to identify the neurons recorded and to confirm their location with respect to the specific thalamic nuclei targeted. Stimulation of the VP evoked ipsps in 79% of the mediodorsal cells recorded. In the reticular nucleus, 73% of the neurons tested responded with evoked ipsps. In contrast, in other dorsal thalamic nuclei VP stimulation evoked depolarizations in 58% of the cells recorded. The latency to onset of the ipsps in the mediodorsal nucleus and in the reticular nucleus were not substantially different (1.7 +/- 1.1 msec vs. 2.7 +/- 1.1 msec), whereas the depolarizing response evoked in dorsal thalamic nucleus neurons typically occurred at longer and more variable latencies (3.5 +/- 2.7 msec). These experiments support a dual functional role for limbic system output from the basal ganglia in the regulation of thalamocortical activity: a) a direct inhibitory projection from the VP to the mediodorsal nucleus and b) an indirect disinhibition of neurons in other dorsal thalamic nuclei that occurs via a direct inhibitory projection to the reticular nucleus of the thalamus. Such an anatomical arrangement may be relevant to the presence of hypofrontality and the breakdown of cognitive filtering observed in schizophrenics.