The preoptic area (POA) or cerebral cortex taken from newborn female rats were transplanted into the third ventricle of ovariectomized adult rats. From the day of transplantation, estradiol-17 beta in a silastic capsule was implanted subcutaneously into host animals for 4 weeks. The POA or cerebral cortex transplants were examined at light- and electron-microscopic levels 4 weeks after transplantation. All of the POA or cortical grafts showed an appearance similar to normal neural tissue. Estrogen exposure for 4 weeks via the host induced a significant increase in the volume of the POA grafts. The neuronal population of the POA grafts exposed to estrogen was not significantly different from that of the POA grafts without estrogen treatment. However, the number of axodendritic shaft and spine synapses of the POA grafts exposed to estrogen was significantly greater than that of the POA grafts without estrogen treatment. In contrast, there was no significant difference in the volume of the cortical tissues transplanted into the brain between the control and estrogen-treated groups. These results suggest that estrogen has a stimulatory effect on the development of neuronal substrates in the intraventricular POA graft, increasing its volume and synaptic population.