Midbrain dopamine neurons play central roles in reward processing. It is widely assumed that all dopamine neurons encode the same information. Some evidence, however, suggests functional differences between subgroups of dopamine neurons, particularly with respect to processing nonrewarding, aversive stimuli. To directly test this possibility, we recorded from and juxtacellularly labeled individual ventral tegmental area (VTA) dopamine neurons in anesthetized rats so that we could link precise anatomical position and neurochemical identity with coding for noxious stimuli. Here, we show that dopamine neurons in the dorsal VTA are inhibited by noxious footshocks, consistent with their role in reward processing. In contrast, we find that dopamine neurons in the ventral VTA are phasically excited by footshocks. This observation can explain a number of previously confusing findings that suggested a role for dopamine in processing both rewarding and aversive events. Taken together, our results indicate that there are 2 functionally and anatomically distinct VTA dopamine systems.