1. Experiments using synaptosome beds suggested that ATP was released from presynaptic sites and degraded to adenosine in the synaptic cleft and that the resulting adenosine was taken up again into nerve endings where it was re-phosphorylated to ATP. 2. Adenosine derivatives in the synaptic cleft inhibited the postsynaptic potentials in olfactory cortex slices in vitro, presumably by the inhibition of Ca2+ influx into nerve endings which resulted in the reduction of transmitter release. 3. The adenosine derivatives also increased the level of cyclic AMP in the slices under the same conditions as above. 4. Although the nature of the "adenosine receptors" for both functions was remarkably similar, the increase of cyclic AMP did not mediate the inhibitory action, but the presynaptic increase of cyclic AMP induced by adenosine derivatives might mediate the facilitation observed in the olfactory cortex. 5. Possible physiological roles of extracellular adenosine derivatives in mammalian brain were classified, at different sites of action around the synapses, with different time courses and modes of action, directly or via the increase of intracellular cyclic AMP.