The role of the dopamine- and cyclic AMP-regulated phosphoprotein of M(r) 32,000 (DARPP-32) in dopaminergic regulation of gene transcription in striatum and globus pallidus was examined. Mice with targeted disruption of the gene encoding DARPP-32, its homologue, inhibitor-1, or both, were used. Pharmacological characterization showed that mutant mice had normal basal levels of dopamine D(1) and D(2) receptors and adenosine A(2A) receptors. Basal expression levels of the striatonigral-specific neuropeptides substance P and prodynorphin and the immediate early genes c-fos and NGFI-A were also unaltered in mutant mice. A full D(1) receptor agonist, SKF 82958, up-regulated the expression of these neuropeptides and immediate early genes significantly more in wild-type mice than in mice lacking DARPP-32. Moreover, the additive stimulation of SKF 82958 and quinelorane, a D(2) receptor agonist, on c-fos mRNA in globus pallidus was significantly decreased in DARPP-32 and DARPP-32/I-1 knockout mice. No changes in dopamine receptor-induced gene expression were found in I-1 knockout mice. These results demonstrate an important involvement of DARPP-32 in dopamine receptor-mediated regulation of gene expression both in striatal neurons, which are enriched in DARPP-32, and in pallidal neurons, which do not contain DARPP-32.