The effects of in utero and lactational exposure of 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD) on brain sexual differentiation were investigated. TCDD was orally administered to pregnant Holtzman rats on gestation day (GD) 15, and the activity of brain aromatase, a key enzyme for sexual differentiation, was measured in offspring on postnatal day (PND) 2. Changes in sexual dimorphisms of saccharin preference and the volume of the sexually dimorphic nucleus of the preoptic area (SDN-POA) were examined in adult offspring. In controls, litter means of brain aromatase activity were higher in males than in females. In utero exposure to 200 ng/kg TCDD significantly decreased the sex ratio of aromatase activity (male/female) on PND 2. Offspring were weaned on PND28 and the saccharin test was started on PND84. In controls, saccharin (0.25%) intake (g/kg body weight) was significantly higher in female offspring than in males. In utero exposure to 200 ng/kg TCDD significantly increased saccharin intake in male offspring compared with control males, whereas 800 ng/kg TCDD had no effect. Neither dose of TCDD influenced saccharin intake of female offspring. In controls, SDN-POA volume was significantly greater in males than in females at 14 weeks of age. Exposure to 200 ng/kg TCDD significantly decreased SDN-POA volume in males, whereas 800 ng/kg TCDD had no effect. Neither doses of TCDD influenced the SDN-POA volume in female offspring. These results suggest that in utero and lactational TCDD exposure dose-dependently induces demasculinization in male offspring by inhibiting brain aromatase activity in the hypothalamus-preoptic area during central nervous system development.