The effects of ipsilateral mesenchephalic periaqueductal gray (PAG) stimulation on lateral hypothalamic (LH), lateral preoptic area (LPA) and ventral and subthalamic activity were determined in anesthetized rats. Recordings from 119 diencephalic neurons indicate that the PAG provides a predominantly inhibitory input to diencephalic neurons. Excitatory input occurred infrequently in the hypothalamus and was not observed in the thalamus. Following single rectangular pulse stimulation, 0.5 ms, 0-500 .mu.A, short latency decreases in activity occurred. Longer latency increases in discharge frequency were also observed. Dose response relations were established for 74% of the LH neurons, 68% of the LPA neurons, and for 72% of the ventral and subthalamic neurons following VTA [ventral thalmic area] stimulation. Decreases and, in a few hypothalamic neurons, increases in activity seemed to involve 1 or 2 synapses. The effects of controlateral PAG stimulation on LPA-LH neuronal activity were determined. Dose response relations were established for 66% of the LPA-LH neurons following contralateral stimulation. Results differed in that many more cells were increased with a shorter latency and at a lower threshold following contralateral stimulation. Antidromic responses verified PAG and diencephalic interconnections and revealed relatively slow conduction velocities, < 1.0 m/s. Results were discussed in terms of the anatomy of known PAG pathways, PAG neuronal activition vs. PAG fibers of passage, and the functions of midbrain-hypothalamic interconnections in the integration of somatic, visceral and nociceptive sensory inputs.