The course, distribution, and possible neurotransmitter specificity of a projection from the lateral hypothalamic area (LHA) and zona incerta to the hippocampal formation (dentate gyrus, Ammon's horn, subicular region, and entorhinal area) and spinal cord were examined anatomically in the adult rat. First, small injections of the fluorescent tracer fast blue were made into either the septal part of the dentate gyrus and Ammon's horn or the entorhinal area, and the distribution of retrogradely labeled cells was plotted. In each experiment many cells were labeled in the LHA and zona incerta, and little evidence for a topographically organized projection to different parts of the hippocampal formation was found. Second, a combined retrograde transport-immunofluorescence method was used to show that some 95% of the fast blue-labeled neurons in the LHA and zona incerta were also stained with an antiserum to the opiate peptide alpha-melanocyte-stimulating hormone (alpha MSH), but not an antiserum to adrenocorticotropin (ACTH)1-24. It was also found that small numbers of retrogradely labeled neurons were stained with antisera to somatostatin 14 and 28, dynorphin (1-17), and angiotensin II. Third, the distribution of alpha MSH-immunoreactive fibers was plotted, and they were found to form a diffusely organized plexus throughout all of the subfields of the hippocampal formation. These fibers were virtually eliminated after transections of the fimbria and the region between the entorhinal area and the caudal amygdala. Forth, the course of fibers from the LHA and zona incerta was examined with the anterogradely transported lectin Phaseolus Vulgaris Leucoagglutinin (PHAL). Such fibers reach the hippocampal formation by a dorsal route through the septal region and fimbria, and by a ventral route through the amygdala. And fifth, double retrograde transport and immunohistochemical methods were used to show that at least some alpha MSH-stained neurons in the LHA and zona incerta give rise to collaterals that innervate both the hippocampal formation and the spinal cord. Alpha MSH-stained fibers in the spinal cord also form a widely scattered plexus with no obvious circumscribed terminal fields. It is suggested that the diffusely organized projection from the LHA to the cerebral cortex and spinal cord may play a role in the general arousal associated with a variety of motivated behaviors.