The enzymatic conversion of oxytocin by brain peptidases has been studied. Oxytocin was incubated with synaptosomal plasma membranes (SPM) isolated from the rat brain. Qualitative studies using a microdansylation technique revealed two types of oxytocin converting peptidases, e.g. aminopeptidase and C-terminal cleaving peptidase activities. Both enzyme activities were quantitated using [14C]oxytocin labeled at either the tyrosine-2 or the glycinamide-9 residue. Radiolabeled products were separated by high-voltage paper electrophoresis or high-pressure liquid chromatography. The aminopeptidase activity was optimally active at pH 6.9 with a Michaelis constant (Km) of 6.1 x 10(-5) M. The pH optimum of the C-terminal cleaving peptidase activity was pH 6.0 with Km = 1.3 x 10(-5) M. Subcellularly, highest amino-peptidase activities were associated with SPM, synaptosomal and microsomal preparations, while the C-terminal cleaving peptidase prevailed in the cytosol and mitochondrial fractions. The regional distribution of both peptidases showed differences between several brain areas and indicated the medial basal hypothalamus as a locus of high oxytocin biotransformation. In the course of this investigation an oxytocin fragment of unknown structure was detected in the digests and its accumulation was studied together with the determination of peptidase activities. It is suggested that the SPM-associated peptidases may have a role in the modulation of oxytocin action in the brain.