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The serotonergic synapse is dynamically regulated by serotonin (5-hydroxytryptamine (5-HT)) with elevated levels leading to the down-regulation of the serotonin transporter and a variety of 5-HT receptors, including the 5-HT type-3 (5-HT3) receptors. We report that recombinantly expressed 5-HT3 receptor binding sites are reduced by chronic exposure to 5-HT (IC50 of 154.0 ± 45.7 μm, t½ = 28.6 min). This is confirmed for 5-HT3 receptor-induced contractions in the guinea pig ileum, which are down-regulated after chronic, but not acute, exposure to 5-HT. The loss of receptor function does not involve endocytosis, and surface receptor levels are unaltered. The rate and extent of down-regulation is potentiated by serotonin transporter function (IC50 of 2.3 ± 1.0 μm, t½ = 3.4 min). Interestingly, the level of 5-HT uptake correlates with the extent of down-regulation. Using TX-114 extraction, we find that accumulated 5-HT remains soluble and not membrane-bound. This cytoplasmically sequestered 5-HT is readily releasable from both COS-7 cells and the guinea pig ileum. Moreover, the 5-HT level released is sufficient to prevent recovery from receptor desensitization in the guinea pig ileum. Together, these findings suggest the existence of a novel mechanism of down-regulation where the chronic release of sequestered 5-HT prolongs receptor desensitization.