Sex differences in the rat brain are dependent, in part, on oestrogen exposure during specific developmental perinatal periods. The availability of oestrogen requires precursor androgen and the presence of intraneuronal aromatase. To examine sites of oestrogen formation and action in the brain, immunocytochemical and biochemical localization of aromatase in the rat brain were determined between embryonic day 14 and postnatal day 20. Aromatase-immunolabelled neuronal profiles were present in hypothalamic, cortical and limbic regions. Surprisingly, aromatase immunoreactivity was also observed in non-limbic regions of the immature brain where it was previously unsuspected. Among these regions, aromatase staining was robust in developing sensory systems, including primary afferents of the olfactory, trigeminal, vestibulocochlear, and visual systems. To determine whether this aromatase is functional in these systems, i.e. converts testosterone to estradiol, the trigeminal nerve was dissected from the hindbrain of perinatal animals and studied for enzyme activity by the tritium release method. The dpm/mg protein/h tritium release in these tissues equalled that of hypothalamic or limbic controls, indicating that these sensory areas are sites of in-situ estradiol synthesis. Our data suggests that aromatase (estradiol)-dependent mechanisms may play a role in the differentiation and maturation of sensory pathways, which, in turn, may contribute to sex differences in the activity of these systems.