Installed this month, the microscope can detect and track single molecules inside nerve cells and can also examine the electrophysiological responses of the same cells simultaneously, university officials say.
Valued at about $1 million, the microscope system is from a major Japanese firm, Olympus, and has been configured specifically for the work of Dr Istvan Abraham, a lecturer in physiology, and colleagues.
The Otago microscope was, in its final configuration, the first of its kind in the world, Alan Jackson, the firm's New Zealand regional manager of microscopy and imaging, said.
There were fewer than 10 such Olympus hybrid microscopes throughout the world.
Dr Abraham said the equipment opened up exciting possibilities.
Being able to examine a single molecule was not unique in neuroscience, but what was unique was the ability to study different kinds of single molecules in living neurons while also measuring the electrical activity of the cells.
Neurons are specialised cells which make up the body's nervous system.
Dr Abraham's research focuses on the female sex hormone estradiol, a form of estrogen, and its effects on intracellular signalling systems within the human brain.
Estradiol played a role in fertility and neuroprotection, with women becoming 200 times more likely to develop Alzheimer's disease after menopause.
Discovering in detail what estradiol did would help the development of better hormone replacement therapies and could provide new insights into protecting brain cells against Alzheimer's disease in both men and women, he said.
"This microscope will make a huge difference.
"If we can increase the quality of the measurement we can get closer to the truth."
Funding support has come from the the physiology department, the Otago School of Medical Sciences Dean's Strategic Equipment Fund, the Centre for Neuroendocrinology and Olympus.