We have examined the morphological relationship of neuropeptide Y (NPY) and GABAergic neurons in the lamprey spinal cord, and the physiological effects of NPY and GABA(B) receptor agonists on afferent synaptic transmission. NPY-containing fibres and cell bodies were identified in the dorsal root entry zone. NPY immunoreactive (-ir) fibres made close appositions with primary afferent axons. Co-localization of NPY and GABA-ir was found in the dorsal horn and dorsal column. Fifty-two per cent of NPY-ir profiles showed immunoreactivity to GABA at the ultrastructural level. Electron microscopic analysis showed that NPY-immunoreactivity was present throughout the axoplasm, including over dense core vesicles, whereas GABA-immunoreactivity was mainly found over small synaptic vesicles. Synthetic lamprey NPY, and the related peptide, peptide YY, reduced the amplitude of monosynaptic afferent EPSPs in spinobulbar neurons. NPY had no significant effect on the postsynaptic input resistance or membrane potential, the electrical component of the synaptic potential, or the response to glutamate, but it could reduce the duration of presynaptic action potentials, suggesting that it was acting presynaptically. NPY also reduced the excitability of the spinobulbar neurons, suggesting at least one postsynaptic effect. Because NPY and GABA colocalize, we compared the effects of NPY and the GABA(B) agonist baclofen. Both presynaptically reduced EPSP amplitudes, baclofen having a larger effect and a faster onset and recovery than NPY. The GABA(B) antagonist phaclofen reduced the effect of baclofen, but not that of NPY. We conclude that NPY and GABA are colocalized in terminals in the dorsal spinal cord of the lamprey, and that they have complementary actions in modulating sensory inputs.