At mammalian synapses, glia respond to neurotransmitters and can, in turn, modulate synaptic transmission. At non-synaptic regions, e.g. in optic nerve, glia also are sensitive to neurotransmitters, but the signaling agents and consequences for neural function are uncertain. ATP and glutamate produce similar responses in neonatal rat optic nerve as electrical stimulation and are, therefore, presumed to contribute to physiological or pathophysiological processes. Using calcium imaging, I tested whether calcium increases of optic nerve glia are activated by the glutamate-containing dipeptide N-acetylaspartylglutamate (NAAG). NAAG, as well as its hydrolyzing enzyme glutamate carboxypeptidase (GCP), is known to be present in rat optic nerve, and its stimulated release from optic nerve terminals has been reported. Studies have not been conducted, however, as to the possible role NAAG plays at non-synaptic regions of the optic nerve. NAAG is released from crayfish Medial Giant Axons upon electrical stimulation and causes a response in associated glia. It is presumed, therefore, to be a non-synaptic axon-glia signaling agent in that system. In vertebrates, NAAG has been speculated to influence myelination in peripheral nerve. Inhibition of GCP increases both the number of remyelinated axons and thickness of myelin after cryolesion in rat sciatic nerve. In the CNS, NAAG has been localized to optic nerve and may be an active non-synaptic axon-glia signaling agent there. Optic nerves from rat pups (P5-9) were removed and desheathed. They were then incubated in the calcium-indicator dye Fluo-3 AM. Chemical agonists were bath-applied to the nerve and calcium transients were imaged using fluorescence microscopy. Bath-applied NAAG produced a dose-dependent calcium increase in the glia. A non-hydrolyzable form of NAAG also increased glial calcium. When the nerve was preincubated in chemicals which increase the effectiveness of glutamate at glutamate receptors, a lower concentration of NAAG activated a response. Together, these results suggest that the NAAG response is likely to result from both intact NAAG and glutamate produced from it. Glutamate receptor agonists also were applied to determine what receptors might cause the responses seen. Agonists for AMPA receptors and metabotropic receptors caused a calcium increase. However, NMDA did not. NAAG may be a physiological or pathophysiological non-synaptic signaling agent in the neonatal rat optic nerve, possibly, in part, by serving as a source of bioactive glutamate. Together with GCP, NAAG is likely involved in modulating myelination in the periphery, and possibly the CNS too.