Although conventional wisdom suggests that the effectiveness of phenytoin as an anticonvulsant is due to blockade of Na+-channels this is unlikely to be it's sole mechanism of action. In the present paper we examined the effects of phenytoin on evoked and spontaneous transmission at excitatory (glutamate) and inhibitory (GABA) synapses, in the rat entorhinal cortex in vitro. Evoked excitatory postsynaptic potentials at glutamate synapses exhibited frequency-dependent enhancement, and phenytoin reduced this enhancement without altering responses evoked at low frequency. In whole-cell patch-clamp recordings the frequency of excitatory postsynaptic currents resulting from the spontaneous release of glutamate was reduced by phenytoin, with no change in amplitude, rise time or decay time. Similar effects were seen on miniature excitatory postsynaptic currents, recorded in the presence of tetrodotoxin. Evoked inhibitory postsynaptic potentials at GABA synapses displayed a frequency-dependent decrease in amplitude. Phenytoin caused a reduction in this decrement without affecting the responses evoked at low frequency. The frequency of spontaneous GABA-mediated inhibitory postsynaptic currents, recorded in whole-cell patch mode, was increased by phenytoin, and this was accompanied by the appearance of much larger amplitude events. The effect of phenytoin on the frequency of inhibitory postsynaptic currents persisted in the presence of tetrodotoxin, but the change in amplitude distribution largely disappeared. These results demonstrate for the first time that phenytoin can cause a simultaneous reduction in synaptic excitation and an increase in inhibition in cortical networks. The shift in balance in favour of inhibition could be a major factor in the anticonvulsant action of phenytoin.