Rats of both sexes treated with the phosphodiesterase inhibitor, isobutylmethylxanthine (IBMX) during the critical, perinatal period when sexual differentiation is conferred upon the brain. Their gain in body weight during development, spontaneous locomotor activity, duration of the oestrous cycle and characteristics of forebrain dopamine binding were compared with control animals as they matured. Treatment with IBMX had no effect on weight gain in either sex. However it reduced spontaneous motor activity in both sexes and disrupted the oestrous cycle in females. Forebrain binding capacity for [3H]-DA was higher in males than in females. This difference was abolished by perinatal treatment with IBMX which reduced male values to those of females. The pattern of displacement of [3H]-DA by unlabelled inhibitors was sexually dimorphic, indicating qualitative differences in the nature of the recognition sites. Perinatal treatment with IBMX modified these displacement patterns in both sexes. The results are consistent with the hypothesis that cyclic AMP is an internal coupling factor which is involved in oestrogen-mediated sexual differentiation of the brain.