Cortistatin is a presumptive neuropeptide that shares 11 of its 14 amino acids with somatostatin. In contrast to somatostatin, administration of cortistatin into the rat brain ventricles specifically enhances slow wave sleep, apparently by antagonizing the effects of acetylcholine on cortical excitability. Here we show that preprocortistatin mRNA is expressed in a subset of GABAergic cells in the cortex and hippocampus that partially overlap with those containing somatostatin. A significant percentage of cortistatin-positive neurons is also positive for parvalbumin. In contrast, no colocalization was found between cortistatin and calretinin, cholecystokinin, or vasoactive intestinal peptide. During development there is a transient increase in cortistatin-expressing cells in the second postnatal week in all cortical areas and in the dentate gyrus. A transient expression of preprocortistatin mRNA in the hilar region at P16 is paralleled by electrophysiological changes in dentate granule cells. Together, these observations suggest mechanisms by which cortistatin may regulate cortical activity.