Neuropeptide Y (NPY) is present in the superficial laminae of the dorsal horn and inhibits spinal nociceptive processing, but the mechanisms underlying its anti-hyperalgesic actions are unclear. We hypothesized that NPY acts at neuropeptide Y1 receptors in dorsal horn to decrease nociception by inhibiting substance P (SP) release, and that these effects are enhanced by inflammation. To evaluate SP release, we used microdialysis and neurokinin 1 receptor (NK1R) internalization in rat. NPY decreased capsaicin-evoked SP-like immunoreactivity in microdialysate of the dorsal horn. NPY also decreased non-noxious stimulus (paw brush)-evoked NK1R internalization (as well as mechanical hyperalgesia and mechanical and cold allodynia) after intraplantar injection of carrageenan. Similarly, in rat spinal cord slices with dorsal root attached, [Leu31, Pro34]-NPY inhibited dorsal root stimulus-evoked NK1R internalization. In rat dorsal root ganglion neurons, Y1 receptors colocalized extensively with calcitonin gene-related peptide (CGRP). In dorsal horn neurons, Y1 receptors were extensively expressed and this may have masked detection of terminal co-localization with CGRP or SP. To determine whether the pain inhibitory actions of Y1 receptors are enhanced by inflammation, we administered [Leu31, Pro34]-NPY after intraplantar injection of complete Freund's adjuvant (CFA) in rat. We found that [Leu31, Pro34]-NPY reduced paw clamp-induced NK1R internalization in CFA rats but not uninjured controls. To determine the contribution of increased Y1 receptor-G protein coupling, we measured [35S]GTPγS binding simulated by [Leu31, Pro34]-NPY in mouse dorsal horn. CFA inflammation increased the affinity of Y1 receptor G-protein coupling. We conclude that Y1 receptors contribute to the anti-hyperalgesic effects of NPY by mediating inhibition of SP release, and that Y1 receptor signaling in the dorsal horn is enhanced during inflammatory nociception.