We have studied the effects of fetal neuronal grafts on the temporal pattern of drinking behavior of suprachiasmatic nuclei (SCN)-lesioned adult rats. Additionally, in an independent set of animals, the immunohistochemical staining for vasopressin, vasoactive intestinal polypeptide, and neuropeptide Y and the retinal connections to the hypothalamus were studied. The behavioral experiments indicate that anterior hypothalamic transplants induced reorganization of the temporal pattern of drinking behavior when placed in the third ventricle of adult hosts bearing complete SCN lesions, but not when placed in a cavity in the occipital cortex. Such rhythmicity persists only when the animals were recorded under constant darkness but not under constant light, indicating that the restored rhythmicity was generated endogenously but that the oscillator was extremely sensitive to light. Fetal occipital cortex induced reorganization of the temporal pattern of previously arrhythmic hosts, but it disappeared when the animals were recorded under constant light or constant darkness. It is clear that this rhythmicity was exogenous. In contrast to the cortical transplants, the hypothalamic transplants showed a morphological organization similar to that found in the normal hypothalamus regardless of their placement in the host brain. From these observations it is concluded that development of neocortex is more affected by environmental factors than that of the hypothalamus. Both hypothalamic and cortical transplants induced sprouting of retinal fibers into the anterior hypothalamus and the grafted tissue. It is possible that such fibers could be the neuroanatomical substrate by which rhythmicity is induced by cortical tissue.