Cocaine administration can be both rewarding and aversive. While much effort has gone to investigating the rewarding effect, the mechanisms underlying cocaine-induced aversion remain murky. There is increasing evidence that the lateral habenula (LHb), a small epithalamic structure, plays a critical role in the aversive responses of many addictive drugs including cocaine. However, the effects of cocaine on LHb neurons are not well explored. Here we show that, in acute brain slices from rats, cocaine depolarized LHb neurons and accelerated their spontaneous firing. The AMPA and NMDA glutamate receptor antagonists, 6, 7-dinitroquinoxaline-2, 3-dione, DL-2-amino-5-phosphono-valeric acid, attenuated cocaine-induced acceleration. In addition, cocaine concentration-dependently enhanced glutamatergic excitation: enhanced the amplitude but reduced the paired pulse ratio of EPSCs elicited by electrical stimulations, and increased the frequency of spontaneous EPSCs in the absence and presence of tetrodotoxin. Dopamine and the agonists of dopamine D1 (SKF 38393) and D2 (quinpirole) receptors, as well as the dopamine transporter blocker (GBR12935), mimicked the effects of cocaine. Conversely, both D1 (SKF83566) and D2 (raclopride) antagonists substantially attenuated cocaine's effects on EPSCs and firing. Together, our results provide evidence that cocaine may act primarily via an increase in dopamine levels in the LHb that activates both D1 and D2 receptors. This leads to an increase in presynaptic glutamate release probability and LHb neuron activity. This may contribute to the aversive effect of cocaine observed in vivo.