In order to clearly identify the cellular elements as well as the organelles containing vasoactive intestinal peptide (VIP), an immunocytochemical localization of this peptide was performed in the rat brain. Ultrastructural localization studies involving use of both pre- and post-embedding staining techniques clearly demonstrated that VIP immunoreactivity was associated with dendrites and axonal processes. In dendrites, the labeling was rather diffuse throughout the cytoplasm whereas in terminals it was observed in large dense core vesicles and not within the small clear vesicles. About 50% of positive endings were observed forming typical synaptic contact. These results support the hypothesis that VIP can act as a neurotransmitter.