1 The effects of theophylline and cholera toxin on water and anion movements across rabbit ileum in vitro and the reversal of these effects by the opiate action of loperamide have been investigated. Water movement across the mucosal and serosal surfaces of the tissue was measured continuously by a high resolution method. 2 Theophylline caused an increase in short circuit current and reversed the direction of net C1- movement, due mainly to a decrease in mucosal-serosal flux. It also caused a rapid, but transient, reversal in the direction of fluid movement across the mucosal surface. Fluid outflow across the serosal surface was decreased but not reversed. Cholera toxin caused a slow inhibition of water movement across both mucosal and serosal surfaces. 3 Theophylline increased the exit rate of 77Br across the mucosal surface and decreased the exit rate of 77Br across the serosal surface. Theophylline increased the exit rate of 3H-labelled mannitol across the mucosal surface. 4 Loperamide reversed the effects of theophylline and cholera toxin on water flow across the mucosal and serosal surfaces and on net transepithelial C1- flux; it also increased the rate of 77Br exit across the serosal surface of theophylline-treated tissue. These effects of loperamide could be reversed by naloxone. 5 The hydraulic conductivity, Lp of the serosal surface was measured directly by determining the osmotic flow generated by low concentrations of polyethylene glycol (mol. wt. 20,000 and 90,000). Theophylline reduced the Lp by 57%. Loperamide added to theophylline-treated tissues increased the Lp by 340%. This effect was reversed by naloxone. 6 These results indicate that modulation of intestinal smooth muscle tone affects transepithelial ion and water flows in vitro. The increase in tone induced by secretagogues increases ion and water reflux via wide shunt channels in the mucosa and thereby reduces net absorption. The increased net fluid and electrolyte absorption induced by loperamide results from the opiate-dependent inhibition of acetylcholine release from intrinsic ganglia which reduces smooth muscle tone and thereby enhances the fluid and electrolyte conductance of the submucosal layers.