Evidence is presented that serotonin acts as a neurotransmitter in the cornea of the adult rabbit. Serotonin was localized to granules in a sparse population of subepithelial corneal nerves by an electron microscopic histochemical procedure. Significant endogenous levels of serotonin and its principal metabolite, 5-hydroxyindoleacetic acid, were detected in the central cornea by a fluorometric assay. Exogenous serotonin stimulated ion transport by corneal epithelium. This effect was potentiated by monoamine oxidase inhibition and was unaffected by an alpha-adrenergic receptor antagonist. Serotonin-stimulated ion transport was inhibited by the specific antagonist, methysergide, and by the replacement of Cl- with an impermeable anion. In tracer experiments, the serotonin-stimulated ion transport was shown to be caused by increased epithelial Cl- secretion. The serotonin response was partially inhibited by the beta-adrenergic antagonist, timolol. In a companion article, assay of corneal cyclic AMP showed stimulation of cyclic AMP synthesis by serotonin, inhibition by the specific antagonist, lysergic acid diethylamide, and potentiation by monoamine oxidase inhibition. We postulate that specific serotonergic receptors are present in the corneal epithelium and that activation of these receptors by serotonin released from serotonergic neurons increases the level of cyclic AMP, which stimulates active Cl- secretion by the corneal epithelium.