The morphological correlates of transmitter release from synapses and varicosities were examined in mature cultures of sympathetic neurons dissociated from neonatal rat superior cervical ganglia. The number of synaptic vesicles decreased in synapses and varicosities depolarized with 53 mM K+. The decrease in vesicle number was accompanied by striking changes in the appearance of the synaptic terminals and an increase in their mean circumference. Coated pits and membrane-bound cisternae were observed more frequently in synapses and varicosities of depolarized neurons than in terminals of resting neurons. These morphological changes were not seen when the neurons were depolarized in the presence of Co2+, consistent with the Ca2+-dependence of transmitter release from these neurons. In freeze-fracture replicas of depolarized neurons, numerous dimples were observed in the cytoplasmic leaflet of synapses and varicosities, adjacent to large 12-14 nm particles. After a period of recovery in 5 mM K+ medium, the number of synaptic vesicles and the shape of synaptic terminals returned to normal. When horseradish peroxidase (HRP) was included in the medium as an extracellular tracer during depolarization and recovery, a significant proportion of small, synaptic vesicles contained reaction product. Label was also present in coated vesicles and cisternae. Neurons which were depolarized in medium containing Co2+ or were exposed to HRP without depolarization contained few labelled synaptic vesicles. The proportion of labelled vesicles was not significantly different in synapses and varicosities, nor did it vary consistently with the transmitter identity of the neurons. These observations are consistent with the hypothesis that transmitter release occurs from varicosities as well as from synapses of postganglionic sympathetic neurons by exocytosis of the small synaptic vesicles, and that at least some new vesicles are formed from the nerve terminal membrane.