Transcripts encoding the vasopressin precursor are located in axons and dendrites of rat hypothalamic magnocellular neurons. While the axonal vasopressin mRNA has been extensively characterized both at the biochemical and morphological level, little is known about those transcripts residing in dendrites of magnocellular neurons. As revealed by in situ hybridization at the electron microscopic level, the mRNA is located in proximal and distal dendritic segments and is exclusively confined to regions containing rough endoplasmic reticulum. These results suggest that dendrites of hypothalamic neurons may be capable of local precursor synthesis independent of that occurring in the cell somata. A heterologous system has been employed to define cis-acting elements within the vasopressin mRNA which may be involved in dendritic compartmentalization. Expression vector constructs consisting of the cytomegalovirus promoter coupled to the rat vasopressin cDNA have been injected into the cell nuclei of cultured neurons derived from embryonic rat superior cervical ganglia. Vector-encoded vasopressin transcripts were also sorted to dendrites of these neurons indicating that the molecular determinants of dendritic mRNA transport are not cell specific. Mapping of the targeting elements revealed two segments within the vasopressin mRNA that are able to confer dendritic compartmentalization to alpha-tubulin mRNA which is normally confined to the cell body.