γ-Aminobutyric acid (GABA), a prominent inhibitory neurotransmitter, is present in high concentrations in β-cells of islets of Langerhans. The GABA shunt enzymes, glutamate decarboxylase (GAD) and GABA transaminase (GABA-T), have also been localized in islet β-cells. With the recent demonstration that the 64,000-M(r) antigen associated with insulin-dependent diabetes mellitus is GAD, there is increased interest in understanding the role of GABA in islet function. Only a small component of β-cell GABA is contained in insulin secretory granules, making it unlikely that GABA, coreleased with insulin, is physiologically significant. Our immunohistochemical study of GABA in β-cells of intact islets indicates that GABA is associated with a vesicular compartment distinctly different from insulin secretory granules. Whether this compartment represents a releasable pool of GABA has yet to be determined. GAD in β-cells is associated with a vesicular compartment, similar to the GABA vesicles. In addition, GAD is found in a unique extensive tubular cisternal complex (GAD complex). It is likely that the GABA-GAD vesicles are derived from this GAD-containing complex. Physiological studies on the effect of extracellular GABA on islet hormonal secretion have had variable results. Effects of GABA on insulin, glucagon, and somatostatin secretion have been proposed. The most compelling evidence for GABA regulation of islet hormone secretion comes from studies on somatostatin secretion, where it has an inhibitory effect. We present new evidence demonstrating the presence of GABAergic nerve cell bodies at the periphery of islets with numerous GABA-containing processes extending into the islet mantle. This close association between GABAergic neurons and islet α- and δ-cells strongly suggests that GABA inhibition of somatostatin and glucagon secretion is mediated by these neurons. Intracellular β-cell GABA and its metabolism may have a role in β-cell function. New evidence indicates that GABA shunt activity is involved in regulation of insulin secretion. In addition, GABA or its metabolites may regulate proinsulin synthesis. These new observations provide insight into the complex nature of GABAergic neurons and β-cell GABA in regulation of islet function.