Thalamic nuclei can generate intrathalamic rhythms similar to those observed at various arousal levels and pathophysiological conditions such as absence epilepsy. These rhythmic activities are altered by a variety of neuromodulators that arise from brainstem regions as well as those intrinsic to the thalamic circuitry. Vasoactive intestinal peptide (VIP) is a neuropeptide localized within the thalamus and strongly attenuates intrathalamic rhythms via an unidentified receptor subtype. We have used transgenic mice lacking a specific VIP receptor, VPAC₂, to identify its role in VIP-mediated actions in the thalamus. VIP strongly attenuated both the slow, 2-4 Hz and spindle-like 5-8 Hz rhythmic activities in slices from wild-type mice (VPAC₂^+/+), but not in slices from VPAC₂ receptor knock-out mice (VPAC₂^-/-) suggesting a major role of VPAC₂ receptors in the anti-oscillatory actions of VIP. Intracellular recordings revealed that VIP depolarized all relay neurons tested from VPAC2^+/+ mice; however, in VPAC2^-/- mice, VIP produced no membrane depolarization in 80% of neurons tested. In relay neurons from VPAC₂^+/+ mice, VIP enhanced the hyperpolarization activated mixed cation current, I_h, via cyclic AMP activity, but VIP did not alter I_h in VPAC₂^-/- mice. In VPAC₂^-/- mice, pituitary adenylate cyclase activating-polypeptide (PACAP) depolarized most relay neurons via I_h enhancement presumably via PAC₁ receptor activation. Our findings suggest that VIP-mediated actions are predominantly mediated by VPAC₂ receptors but PAC₁ receptors may play a minor role. The excitatory actions of VIP and PACAP suggest these peptides may not only regulate intrathalamic rhythmic activities, but influence information transfer through thalamocortical circuits.