Dopaminergic neurons exert a major modulatory effect on the forebrain. Dopamine and adenosine 3',5'-monophosphate-regulated phosphoprotein (32 kilodaltons) (DARPP-32), which is enriched in all neurons that receive a dopaminergic input, is converted in response to dopamine into a potent protein phosphatase inhibitor. Mice generated to contain a targeted disruption of the DARPP-32 gene showed profound deficits in their molecular, electrophysiological, and behavioral responses to dopamine, drugs of abuse, and antipsychotic medication. The results show that DARPP-32 plays a central role in regulating the efficacy of dopaminergic neurotransmission.