The modulation of oxytocin (OT) receptors (OTRs) by estrogen was investigated in the ventromedial hypothalamus by in vitro receptor autoradiography. Treatment of ovariectomized and adrenalectomized rats with various doses of estradiol benzoate (EB) increased OTR binding not only in the ventromedial nuclei of the hypothalamus (VMN), but also in the area lateral to the nuclei (IVMN). After a single injection of EB, OTRs first were induced within the ventrolateral parts of the VMN, and only hours later they appeared in the IVMN. This is consistent with the interpretation that OTRs are first induced within the estrogen- sensitive neurons of the ventrolateral VMN and then are transported laterally out of the nuclei. Two additional experiments confirmed this interpretation. First, local infusion of a low dose (10 micrograms) of the neuronal transport inhibitor vinblastine blocked the appearance of OTRs in the IVMN but did not prevent the induction of OTRs by EB within the nuclei. Second, a knife cut placed lateral to the VMN prevented the spread of OTRs out of the nuclei. However, even after treatment with a high dose of EB (2 x 10 micrograms), progesterone (P) was required for a maximal extension of the area covered by OTRs. Thus, the OTR is an estrogen-induced neurotransmitter receptor that is transported to its site of action, the lateral ventromedial hypothalamus, where it is modulated by P and where estrogen-induced OT immunoreactivity is found.