In order to identify the neuronal structures as well as the intracellular organelles which contain the newly discovered brain peptide, neuropeptide Y (NPY), we have localized this peptide by immunoelectron microscopy in brain areas containing high levels of NPY. Ultrastructural studies using both the pre- and post-embedding immunoperoxidase techniques have shown that NPY-like immunoreactivity could be observed in neuronal cell bodies, dendrites and axonal processes. In terminals, the reaction product was associated with the large dense core vesicles. Only a small percentage of the positive terminals were seen making synaptic contacts. These results support the hypothesis that NPY can act as a neurotransmitter or neuromodulator.