Adrenocorticotropin and beta-lipotropin (beta-LPH) have been localized by immunoperoxidase methods in nerve cells and fibers of the hypothalamus and brain stem of the ewe. 6-mum sections were immunostained first for either ACTH or beta-LPH. The reaction products and the antibody complexes were then eluted completely from the tissue, and the same section was immunostained for the second peptide. Absorption of the primary antisera with a variety of peptide fragments of ACTH and beta-LPH demonstrated, immunocytochemically as well as by radioimmunoassay, that the ACTH and beta-LPH antisera were directed to the COOH- and NH(2)-termini of the peptides, respectively. Neither antiserum recognized any portion of the heterologous peptide. In the sequential staining procedure on the same tissue section, preincubation of the antisera with the homologous peptide abolished the staining, whereas preincubation with the heterologous peptide did not affect it, regardless of the order followed. Every nerve cell in the arcuate nucleus that contained ACTH also contained beta-LPH, but beta-LPH cells appeared, probably falsely, to be twice as numerous as ACTH cells. beta-LPH-positive fibers in and beyond the hypothalamus were also more numerous and stained more intensively than ACTH fibers. The salient exception was fibers in the infundibular zona externa, where the opposite was true. Our observations establish that ACTH and beta-LPH are contained in the same nerve cells They stongly favor biosynthesis in brain, probably from a common precursor molecule, as has been demonstrated in the pituitary gland. The complexity of the cytologic distribution pattern described suggests that the two peptides are not processed in the same manner by the nerve cell.