Fetal striatal cell suspensions were grafted stereotaxically into the infarcted striatum of rats, and reconstruction of striatopallidal GABA transmission and behavior were investigated. Occlusion of the middle cerebral artery (MCA) for one hour induced ischemic infarcts mainly in the lateral striatum, as detected by magnetic resonance imaging (MRI) and histology. Ischemic rats had deficits in the performance of a passive avoidance task, both acquisition and retention, but no changes in general circadian actograms. In these animals pallidal GABA, detected by microdialysis, decreased to about half of control levels. There were suggestions of an improvement in passive avoidance performance in the grafted animals. Pallidal GABA concentrations recovered almost to control levels, and were increased by infusions of the GABA uptake blocker nipecotic acid. These data indicate that neural transplantation is a promising approach to improve the deficits in chemical transmission and behavior following ischemic infarcts in rat striatum.