We have previously shown that a bioactive neuropeptide-like sequence is present at the carboxy-terminus of the teneurin transmembrane proteins. We have subsequently called this peptide 'teneurin C-terminal associated peptide' (TCAP). The sequence encodes a peptide 40 or 41 amino acids long flanked by a cleavage motif on the amino terminus and an amidation motif on the carboxy terminus, characteristic of bioactive peptides. This sequence is highly conserved in all vertebrates. A TCAP-like sequence is encoded by each of the four teneurin genes. We have therefore examined the neurological role TCAP-1 may play in mice and rats. In situ hybridization studies showed that the teneurin-1 mRNA containing the TCAP-1 sequence is expressed in regions of the forebrain and limbic system regulating stress and anxiety. A synthetic version of amidated mouse/rat TCAP-1 was prepared by solid-phase synthesis and used to investigate the in vitro and in vivo activity. TCAP-1 induces a dose-dependent change in cAMP accumulation and MTT activity in immortalized mouse neurons. Administration of synthetic TCAP-1 into the basolateral amygdala significantly increases the acoustic startle response in low-anxiety rats and decreases the response in high-anxiety animals in a dose-dependent manner. When 30 pmol TCAP-1 is administered into the lateral ventricles each day for 5 days, the sensitization of the rats to the acoustic startle response is abolished. These data indicate that TCAP may possess functions that are independent of the teneurin proprotein and together, the teneurins and TCAP, may represent a novel system to regulate neuronal function and emotionality.