The nervous system of hydra consists of a nerve net that extends throughout the animal. Because of the tissue dynamics of hydra, the nerve net is in a steady state of production and loss of neurons. Neurons are continuously produced in the body column and are constantly lost by sloughing at the extremities and into developing buds. Consequently, every neuron is continuously displaced towards an extremity. A subset of the neurons of the nerve net, termed vasopressin- like-immunoreactive (VLI+) neurons, has been identified with an antiserum against vasopressin. This subset has a specific regional distribution in that it is found in the head, peduncle, and foot of an adult hydra. The VLI+ neurons in the head and peduncle are ganglion cells, while those in the foot include a newly described sensory cell. How is the regional distribution of the subset maintained when every neuron is continually changing location? Removal of the neuron precursors indicates the VLI+ neurons can arise by conversion from VLI- neurons of the body column. In the normal animal they probably arise by conversion as well as by differentiation. Conversion of VLI- to VLI+ neurons is due to a change in axial position, or region, instead of a maturation process.