We investigated the role of the protein phosphatase inhibitor, dopamine- and cAMP-regulated phosphoprotein of 32 kDa (DARPP-32), in the expression of striatal neuropeptides and in biochemical and behavioural responses to repeated cocaine administration, using DARPP-32 knock-out mice. The striatum of DARPP-32-mutant mice showed heightened substance-P-like immunoreactivity, but normal levels of other neuropeptides. Repeated cocaine administration increased levels of DeltaFosB, a Fos family transcription factor, in the striatum of wild-type mice, and this increase was abolished in DARPP-32-mutant mice. Cocaine (20 mg/kg) acutely induced the same level of locomotor activity in the mutant and wild-type mice, but the mutants showed a higher rate of locomotor sensitization to repeated cocaine exposures. These data show that DARPP-32 is involved in regulating substance P expression in the striatonigral pathway, and in biochemical and behavioural plasticity with chronic administration of cocaine.