We describe a hypothalamus-specific mRNA that encodes preprohypocretin, the putative precursor of a pair of peptides that share substantial amino acid identities with the gut hormone secretin. The hypocretin (Hcrt) protein products are restricted to neuronal cell bodies of the dorsal and lateral hypothalamic areas. The fibers of these neurons are widespread throughout the posterior hypothalamus and project to multiple targets in other areas, including brainstem and thalamus. Hcrt immunoreactivity is associated with large granular vesicles at synapses. One of the Hcrt peptides was excitatory when applied to cultured, synaptically coupled hypothalamic neurons, but not hippocampal neurons. These observations suggest that the hypocretins function within the CNS as neurotransmitters.