An important step in the posttranslational modification of many bioactive neuropeptides, the carboxy-terminal amidation of glycine- extended peptides, is catalyzed by peptidylglycine alpha-amidating monooxygenase (PAM; EC 22.214.171.124). The expression of the gene encoding this enzyme was examined in adult rat brain by in situ hybridization histochemistry and immunocytochemistry. PAM mRNA transcripts and PAM- like immunoreactivity were detected in all major brain areas with the exception of the cerebellum. Very high levels of PAM mRNAs were found in the hypothalamic magnocellular neurons, the hippocampal formation, and olfactory cortex. These areas also showed strong PAM-like immunoreactivity. Regions known to contain high levels of amidated neuropeptides also expressed high levels of PAM mRNA. The observed heterogeneous PAM mRNA levels may reflect differences in the peptidergic activity of different neuronal systems. Interestingly, all pyramidal neurons of the hippocampus expressed very high levels of PAM mRNA, although no identified amidated peptide matches this distribution completely. Furthermore, PAM was not expressed exclusively in neuronal tissue but was also present in non-neuronal tissue. PAM transcripts could be localized in certain ventricular ependymal cells, with the highest expression in the lateral ventricle. Localization of PAM to non- neuronal cells and neurons not known to produce alpha-amidated peptides suggests that these cells may be producing as yet unidentified amidated neuropeptides.