The galanin N-terminal fragment [galanin-(1-16)] has been prepared by solid-phase synthesis and by enzymic cleavage of galanin by endoproteinase Asp-N. This peptide fragment displaced 125I-labeled galanin in receptor autoradiography experiments on rat forebrain and spinal cord and in equilibrium binding experiments from high-affinity binding sites in the ventral hippocampus with an IC50 of approximately 3 nM. In tissue slices of the same brain area, galanin-(1-16), similarly to galanin, inhibited the muscarinic agonist-stimulated breakdown of inositol phospholipids. Upon intracerebroventricular administration, galanin-(1-16) (10 micrograms/15 microliters) also inhibited the scopolamine (0.3 mg/kg, s.c.)-evoked release of acetylcholine, as studied in vivo by microdialysis. Substitution of [L-Trp2] for [D-Trp2] resulted in a 500-fold loss in affinity as compared with galanin-(1-16). It is concluded that, in the ventral hippocampus, the N-terminal galanin fragment [galanin-(1-16)] is recognized by the galanin receptors controlling acetylcholine release and muscarinic agonist-stimulated inositol phospholipid breakdown as a high-affinity agonist and that amino acid residue [Trp2] plays an important role in the receptor-ligand interactions.