The histochemical method for the demonstration of D-amino acid oxidase activity in rat liver, based on the use of cerium ions and the diaminobenzidine-cobalt-hydrogen peroxide procedure, was improved by the application of unfixed cryostat sections and a semipermeable membrane interposed between section and gelled incubation medium. The amount of final reaction product precipitated in a granular form was about four times higher with this technique in comparison with conventional procedures using fixed sections and aqueous incubation media. The specificity of the reaction was proven by the 70% reduction of the amount of final reaction product when incubating in the presence of substrate and D,L-beta-hydroxybutyrate, a specific inhibitor of D-amino acid oxidase activity. Cytophotometric analysis of liver sections revealed that the specific test minus control reaction was linear with incubation time and section thickness. The Km value of the enzyme of 10.3 +/- 2.7 mM, as determined in periportal areas, is about five times the value found with biochemical methods in liver cell homogenates. The enzyme activity in periportal areas is about five times the activity in pericentral areas. Fasting (24 and 48 hr) induced a significant decrease in D-amino acid activity in periportal and pericentral areas. The possible physiological role of the enzyme in liver is discussed.