In the present study, we employed in vivo microdialysis in the frontal cortex of the awake rat to investigate the effects of acute and short‐term (twice daily, 3 days) lithium chloride administration (1, 2, and 4 meq/kg, s.c.) on local dialysate glutamate and GABA levels. Acute lithium (1 meq/kg) failed to influence cortical glutamate levels while the higher (2 and 4 meq/kg) doses increased (+38 ± 6% of basal levels) and reduced (‐27 ± 4%) cortical glutamate levels, respectively. Cortical GABA levels were affected by acute lithium only at the highest 4 meq/kg dose (+62 ± 6%). Furthermore, these effects were prevented by tetrodotoxin (1 μM) and low‐calcium (0.2 mM) medium perfusion. Following short‐term administration, lithium increased (+58 ± 4%) cortical dialysate glutamate levels at the 1 meq/kg dose, was ineffective at 2 meq/kg, while the effect of the 4 meq/kg dose was similar to that observed after acute administration. Interestingly, intracortical perfusion with the GABAB receptor antagonist CGP 35348 (100 μM) reversed the acute lithium (4 meq/kg)‐induced decrease in glutamate levels. Taken together, these findings indicate a differential dose and duration dependent effect of lithium on cortical dialysate glutamate levels involving both a direct enhancement and an indirect inhibition that is mediated via an activation of local GABAB receptor. These findings may be relevant for the therapeutic effects of the drug. Synapse 38:355–362, 2000. © 2000 Wiley‐Liss, Inc.