Dopamine modulates prefrontal cortex excitability in complex ways. The net effect of dopamine on local neuronal networks is, therefore, difficult to predict based on studies on pharmacologically isolated excitatory or inhibitory connections. In the present work, we have studied the effects of dopamine on evoked activity in acute rat brain slices when both excitation and inhibition are intact. Whole-cell recordings from layer II/III pyramidal cells under conditions of normal synaptic transmission showed that bath-applied dopamine (30 µM) increased the outward inhibitory component of composite postsynaptic currents whereas inward excitatory currents were not significantly affected. Optical imaging with the voltage-sensitive dye RH 414 revealed that bath application of dopamine significantly decreased the amplitude, duration, and lateral spread of activity in local cortical networks. This effect of dopamine was observed both with single and train (5 at 20 Hz) stimuli. The effect was mimicked by the D1-like receptor agonist SKF 81297 (1 µM) and was blocked by SCH 23390 (10 µM), a selective antagonist for D1-like receptors. The D2-like receptor agonist quinpirole (10 µM) had no significant effect on evoked dye signals. Our results suggest that the effect of dopamine on inhibition dominates over that on excitation under conditions of normal synaptic transmission. Such neuromodulation by dopamine may be important for maintenance of stability in local neuronal networks in the prefrontal cortex.