Re: How does Isolated Small intestine of a rat still contract?

Peristalsis is a local property of the gut. As you mentioned, an isolated 
piece can undergo peristalsis meaning that the reaction is intrinsic to 
the gut tissue. However one should be aware that within an intact system 
neural and hormonal factors can regulate the peristalsis within the gut.

It is thought that the neural plexuses within the gut wall regulates 
peristalsis. Below I am quoting from a wonderful text on comparative 
physiology (by Withers, Comparative Animal Physiology. Saunders College 
Publishing, 1992, ISBN 0-03-012847-1).

“Meissner’s plexus is located in the submucosa near the circular smooth 
muscle layer, and Auerbach’s plexus is located between the circular and 
longitudinal muscle layers. Meissner’s plexus has sensory neurons that 
are stimulated by the presence of food in the gut; these neurons control 
secretion by the intestinal epithelial cells and endocrine cells and 
stimulate contraction of the smooth muscle for peristalsis. Auerbach’s 
plexus has motor neurons that innervate the circular and longitudinal 
smooth muscle layers. Peristalsis occurs as a local reflex initiated by 
the sensory detection of food in the gut (by Meissner’s  plexus) with a 
motor action (due to Auerbach’s plexus) of  circular muscle stimulation 
behind the food to constrict the lumen and longitudinal muscle stimulation 
ahead of the food to dilate the lumen. The wave of reflex constriction 
squeeze the food bolus along the gut tube until the wave of peristalsis 
disappears.”

In order to put some of this in perspective—contraction of the inner 
circular muscle layer constricts the lumen of the gut tube, whereas 
contraction of the longitudinal muscle layer shortens the gut tube and 
dilates the lumen.

I hope this helps.